Your best product is selling. The reviews are good, the advertising is bringing in orders and the supplier is offering a better price if you increase the next shipment. This should feel like progress.
Then you check the bank balance. The stock deposit looks affordable, but there is a balance payment coming on another order. VAT is due soon. Advertising still needs paying, and some of last week's sales have yet to reach the bank.
Suddenly, the question is whether you can afford to keep selling at the rate you have worked hard to achieve.
This is a cash-flow problem that can develop inside a profitable ecommerce business. Stock needs funding before it produces receipts, and growth increases that commitment. A product can earn a healthy margin while leaving you short at exactly the point you need to buy more of it.
The answer starts with putting the purchasing plan and the cash forecast together. You need to know when stock will run out, when replacement stock must be paid for and what those payments leave for the rest of the business. Here is how I would work through it.
Why profitable ecommerce brands run short of cash
Profit and cash follow different timetables. You might pay a deposit today, the supplier balance in six weeks and freight later still. The goods then arrive and sell over several months. By the time the last units are sold, you may already have committed to the next batch.
That overlap is where growth becomes expensive. The first shipment may fund part of the second, but a much larger second shipment needs more money before it has generated any of its own.
There is an accounting point here too. Buying unsold stock normally creates an asset; its cost is recognised as the goods are sold, subject to appropriate valuation adjustments. The cash has left, even though the whole purchase has not reduced the period's profit. That also means a stock purchase does not automatically remove the Corporation Tax liability on earlier profits.
Before looking for funding, establish what is causing the pressure. A profitable product with a long purchasing cycle needs a different response from a product that loses money after advertising and fulfilment. Borrowing can fund the first situation. In the second, you need to change the economics as well.
Start with the stock you need, then map the payments
The first job is to establish which products deserve replenishing and when. Look at sales by product, available stock, incoming orders and the full replenishment lead time. Include production, shipping and the time needed to get goods checked into the warehouse and available to sell.
For example, if a product sells 100 units a week and replenishment takes eight weeks, demand during that lead time is 800 units. Adding two weeks of safety stock gives a reorder point of 1,000 units of stock position: stock on hand plus incoming stock, less committed demand. That buffer needs to reflect how reliable your sales and supplier actually are.
Seasonal demand changes the calculation. A Christmas order needs a plan for when customers will buy and when the stock must arrive. It also needs a sensible answer to what happens to the remaining units if the peak is weaker than expected.
Once you have a proposed order, turn it into a payment schedule. Confirm the supplier deposit and balance dates, freight, duty, handling and any import VAT paid upfront. For overseas purchases, use a realistic sterling cost and allow for exchange-rate exposure where the price is not fixed.
A quote for £30,000 of goods may be a £36,000 cash commitment after delivery and associated costs. That full amount belongs in the plan. The deposit is simply the first part you have to pay.
A worked example: The £35,000 balance that is not all available
Imagine a brand with £35,000 cleared cash and enough existing stock to support the trading forecast below. It expects £12,000 of customer receipts to reach the bank each week, with £8,000 of regular cash payments for advertising, fulfilment, wages and other running costs.
The next shipment requires a £9,000 deposit in week one, a £21,000 supplier balance in week four and £6,000 freight, duty and associated payments in week five. There is also an £8,000 VAT payment due in week four.
These are illustrative cash movements, not a profit calculation. Customer receipts are the amounts expected to reach the bank after settlement deductions; the running-cost figure excludes any fees already withheld from those receipts. Tax payments appear separately. The business has confirmed that postponed VAT accounting applies to this import, so there is no upfront import VAT payment in this example.
| Week | Bank receipts | Running costs | Stock and import payments | VAT payment | Closing cash |
|---|---|---|---|---|---|
| One | £12,000 | £8,000 | £9,000 | £0 | £30,000 |
| Two | £12,000 | £8,000 | £0 | £0 | £34,000 |
| Three | £12,000 | £8,000 | £0 | £0 | £38,000 |
| Four | £12,000 | £8,000 | £21,000 | £8,000 | £13,000 |
| Five | £12,000 | £8,000 | £6,000 | £0 | £11,000 |
| Six | £12,000 | £8,000 | £0 | £0 | £15,000 |
The business finishes week three with more money than it started with. Looking at that balance alone, another commitment might seem reasonable. Two weeks later, cash has fallen to £11,000.
Suppose the business has agreed a minimum cash buffer of £15,000 after allowing for the payments already forecast. The order takes it £4,000 below that level. It can technically pay the scheduled bills, but it will have less headroom than it has decided it needs.
That is the decision to address before paying the deposit. Do we change the quantity, negotiate payment timing, release cash elsewhere, arrange suitable funding or accept the risk? The forecast gives you time to choose. The bank balance in week three would have given you rather more confidence than the position deserved.
This six-week example highlights the pressure point. In the actual forecast, keep going through the sale of the new stock and the payments for the order after it. Otherwise, you may fix one shipment and discover the same problem waiting behind the next.
Build the forecast around money reaching and leaving the bank
Keep a weekly cash forecast covering roughly the next three months, alongside a monthly forecast for the coming year. The weekly view helps you spot payments landing together. The longer view catches seasonal builds and purchasing commitments that extend beyond the next quarter.
A spreadsheet is enough to start. Use the opening cash balance, add expected receipts, subtract payments and carry the closing balance into the next week. The work is getting the dates and amounts right.
Use settlement dates rather than the order date
A Shopify or Amazon sale is not necessarily money available in the bank that day. Allow for your actual payout schedule, payment-provider deductions, refunds and any reserves or holds. For wholesale customers, use a realistic collection date rather than assuming every invoice is paid on time.
Be consistent about fees. If they are already deducted from forecast payouts, do not include the same fees again as separate cash payments. If a platform uses its balance to pay advertising charges, reflect that in the expected settlement rather than counting the full sales receipt and forgetting the deduction.
Include commitments before the invoices arrive
Add stock deposits, supplier balances, freight and duty when they are due. Include advertising payments, payroll, rent, software, loan repayments, tax and planned owner withdrawals. A purchase order can commit the business well before the invoice appears in the bookkeeping.
Do not deduct an accounting cost-of-sales percentage again if the forecast already contains the cash payments for that stock. That would count the purchase twice. Use the profit forecast to assess margin and the cash forecast to map the payments. They should explain each other without being treated as the same report.
For eligible VAT-registered importers, postponed VAT accounting can remove the need to pay import VAT upfront and recover it later. The normal recovery rules still apply, and the import arrangements must be correct. Where an agent makes the declaration, give the required written instructions before the import. It does not remove Customs Duty.
Agree the cash level you want to protect
Set a minimum buffer that reflects the operation's commitments and risks. A business with long lead times, seasonal demand and one main supplier needs to consider different exposures from one that can replenish locally each week.
Keep known tax bills and committed purchases in the forecast. The buffer is additional headroom; it should not rely on forgetting payments you already know about.
Then update the forecast weekly as actual results arrive. Replace estimates with what happened, investigate the differences and add another week at the end. You want a current view of the decision ahead, rather than an increasingly historic record of what you hoped would happen.
Test the order against slower receipts
A forecast based on expected sales tells you whether the plan works as intended. I also want to know how much has to change before it stops working.
Return to the example. If bank receipts are 20% lower each week and the scheduled payments stay unchanged, the £11,000 low point becomes a £1,000 deficit in week five. Maintaining the chosen £15,000 buffer would require a £16,000 improvement in cash at that point, rather than £4,000.
Some costs may fall with sales, and others can be changed. Until those reductions are identified and achievable, keep the committed payments in the test. This shows how much the order depends on receipts arriving as planned.
Also test a shipment arriving late, a settlement being held or freight costing more. A delay can prevent the new stock generating receipts when expected, while repayments and other commitments continue. For seasonal products, arrival after the main selling period deserves particular attention.
You do not need dozens of scenarios. Use the two or three setbacks that would matter most to this purchase and work out what you would do. The question is whether the business can absorb a believable problem while keeping the rest of the operation funded.
What to change if the order leaves you short
A cash gap does not automatically mean abandoning a good order. It means deciding how to fund or reshape it before the commitment becomes difficult to change.
Start with the purchase and the supplier
Ask whether the quantity is right for demonstrated demand. A bulk discount can look attractive while committing cash that would earn more through advertising or replenishing a stronger product. Keep quality and selling time in the decision: a larger order of a product with unresolved defects or slowing demand deserves a challenge.
Explore a smaller deposit, a later balance payment, staged orders or staged deliveries. Check whether a delivery arrangement actually changes the payment dates; receiving goods in stages gives little funding benefit if you pay for the whole batch upfront.
In our example, moving £6,000 of the supplier balance from week four to week seven would lift week-five cash from £11,000 to £17,000. That clears the original buffer issue. But week seven now has another payment, so continue the forecast to confirm that the improvement lasts. The supplier also needs to agree the revised terms before you rely on them.
Release cash already tied up in the business
Review slow-moving products and lower-priority commitments. A controlled clearance may release cash for a proven bestseller. Pausing a speculative new product may be more sensible than restricting the marketing that sells your established range.
Look at the contribution and likely return of each option. Cutting effective advertising can improve this week's outflow while reducing the receipts you need next month. Reforecast the consequence rather than assuming every spending cut improves the overall position.
Keep tax payment dates visible in the same exercise. If cash needed for a future tax bill is used temporarily, show how it will be replaced and test the timing. The tax liability remains part of the plan even while the money is doing another job.
Compare finance with the return from the order
Finance can be a sensible way to support a profitable purchasing cycle. Compare the total fees and interest, repayment dates, security requirements and the cash available after repayments.
For illustration, if an order is expected to contribute £18,000 after its product and variable selling costs, a £1,500 finance cost leaves £16,500 before overheads and tax. You then need to establish whether the repayment schedule fits the receipts and whether the remaining contribution justifies the commitment.
Put the actual finance drawdown, fees and repayments into the forecast. Test the slower-sales case again. Funding the deposit alone is of limited use if the business cannot meet the balance payment or the first repayments before the goods sell.
Make the next order easier to fund
Once the immediate decision is settled, use the forecast to improve the purchasing cycle. Review whether quantities match sell-through, whether supplier terms can develop as the relationship grows and whether slow lines are absorbing money needed elsewhere.
Include incoming orders alongside stock on hand so you do not commit twice to the same demand. When a product is improved or replaced, plan the transition around existing stock. When sales accelerate, bring the next deposit into the forecast straight away. Faster sales can bring the next cash requirement forward as well as increase it.
Most importantly, connect purchasing with marketing and operations. A campaign can sell through stock earlier than expected. A fulfilment problem can delay dispatch and increase refunds. The cash plan needs the information from the people creating those changes.
For the wider relationship between purchasing, customer acquisition, delivery and margins, our guide Growing an Ecommerce Business: The Financial Decisions Behind Profitable Growth follows the full journey. This purchasing forecast is one part of making those decisions work together.
Conclusion: Decide what you can commit before paying the deposit
A growing ecommerce brand needs stock available to sell and enough cash to keep the business moving while it waits for the return. Knowing the margin is essential. Knowing the payment timetable tells you whether you can afford the next step.
Start with the stock you need, map the complete commitment and forecast when receipts will reach the bank. Look at the lowest cash balance, test a credible setback and change the plan while you still have options.
At COPA, we use founders' existing accounts, sales and purchasing figures to discuss stock commitments, tax and affordable growth. If sales are progressing but the next order is becoming harder to fund, speak to us about your ecommerce business. The useful starting point is the order you want to place and what it leaves the business able to do afterwards.