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How to Overcome Your Toughest eCommerce Cash Flow Challenges

MarketplaceOps September 8, 2020 2 Comments

Financial Challenges for Online Sellers

The importance of having enough cash on hand is well known to all entrepreneurs and when it comes to selling online, things are no different. Even the best online sellers experience decreases in sales and supply-chain complications which can impact cash flow, but sometimes the need for more funds is driven by opportunity. 

In Quickbooks’ 2019 The State of Small Business Cash Flow report, 61% of businesses from around the world revealed that they have struggled with cash flow, with 42% experiencing challenges in the 12 months prior to the report. However, despite these hardships, Amazon’s 2020 SMB Impact Report shows how eCommerce continues to thrive.

So, what are some of the financial challenges faced by online sellers, and how can you overcome them to increase your chances of success? Let’s get started and dive right in.

Challenge #1: Delays in Marketplace Payouts

Whether you’re selling on Amazon, Walmart, Wish, or one of the many other marketplaces out there, most cash flow problems result from delays between the point of sale and the marketplace payout of your earnings.

Even though the sale itself happens quickly, with some orders being purchased, shipped, and delivered in the span of only a day or two, it can take much longer to see the funds hit your bank account. Meanwhile, as you wait for your profits, you still must cover your inventory, marketing, fees, and logistics costs.

Challenge #2: Inventory Demands to Expand Your Business

Another common reason for cash flow issues is the inventory struggle. Unless you’re drop-shipping, you need to buy your inventory in order to have products to sell. If you can get that inventory at a discounted bulk price, you’ll want to do that, and a steady and reliable cash flow is crucial to take advantage of those opportunities. 

This sounds easy enough in theory, but when you remember the delays between the sale and the payout from the marketplace, this challenge can be a difficult one, especially for new sellers. Even after all the profits land in your account, there’s a limit to how much growth you can achieve.

Let’s use Luke as an example:

Luke has been selling swimsuits for years, and his swimsuits cost him $10 per unit to stock. Luke has $50,000 to start the quarter, so he buys 5,000 units which he will sell for $20 each. His gross earnings are $100,000 but when you subtract the cost of goods ($50,000), the ~15% marketplace fee ($15,000), and the ~25% operational expenses ($25,000), Luke is left with $10,000 profit. 

If he continues to invest the profits back into his business as the quarter proceeds, he’ll start to see growth, as seen in the table below:

As you can see, between months 1 and 4, Luke has only been able to grow his business by just under 25%. This is primarily due to Luke’s profits being tied up in additional inventory.

Likewise, the constant demand for more inventory to expand your own business means your funds are often tied up. So, how can you grab the opportunity of an upcoming peak consumer spending season and cash in on potential sales? Everything is delayed, including your earnings, and now you need cash to get more of the right inventory — that’s the cash flow problem.

Solving the Cash Flow Problem

To solve the cash flow challenge and enable online sellers like you to take advantage of potential growth opportunities, Payoneer is offering the MarketplaceOps community a new approach to easing their cash flow – the Capital Advance program.

Capital Advance can help you grow your business by enabling you to receive extra working capital funds in minutes. You can use these funds to buy more inventory before peak seasons, expand into new products and markets, pay for your advertising, and much more. This working capital solution essentially gives your business the extra boost it needs.

To see how this works in practice, let’s revisit Luke’s swimsuit business. This time, however, Luke has accepted a $100,000 Capital Advance after his first month of sales. If Luke uses a third of his advance ($33,333) each month to increase his inventory without going over his forecasted sales expectancy, his store earnings and profits would look very different. By the end of month 4, he would have grown his monthly profits from $10,000 to $18,577.

As you can see, the growth potential is much greater with the extra boost of a Capital Advance and leads to a profit gain of an impressive 86% between months 1 and 4, compared to 25% growth from the same store without the advance.

So, how does it work?

Payoneer offers eligible customers short-term cash boosts that can help with day-to-day needs and inventory costs. As you accept and successfully settle your Capital Advance offers, you can become eligible to receive larger cash injections to really kick business growth into gear. 

Although the size of the offers you receive will depend on your online store’s sales performance, all working capital offers include three great features that make Capital Advance the ideal cash flow management solution:

1. Instant funds with no credit checks or collateral

Payoneer extends working capital offers based on your marketplace sales history and you can get the funds in your Payoneer account with just a few clicks.

2. Gradual settlement from marketplace sales

Once you accept the offer, Payoneer will collect a portion of your future marketplace sales. That means they only get paid when you do, while leaving you with cash to maintain your business between payout dates. After an offer is completely settled, a new offer will follow it, subject to eligibility requirements.

3. One low, fixed fee

There’s nothing worse than the surprise fees and hidden costs that can really impact your bottom line. With Payoneer, you’ll only be charged one fee after you finish settling your advance and you’ll see the fee amount before you accept the offer.

This article is in partnership with Payoneer. If you are looking to grow your eCommerce business just like Luke, click here to learn more about working capital or contact Ben Stein at Payoneer today.

Featured photo by cottonbro from Pexels


    September 28, 2020 Reply

    I always wanted to start an ecommerce business but I’m afraid about where to get money for content development and promotion. Your ideas here are helpful but I think I’m still looking for a hands-on solution to business funding.

      October 2, 2020 Reply

      Hey Paulina! Thanks for checking out our article. If you’re looking for more solutions to business funding, you can contact Ben Stein (, he might be able to offer you other hands-on alternatives to fund your content development and promotions that weren’t mentioned in this article.

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