“We had our best month ever and couldn’t pay the supplier.” If you’ve run an online store for more than a year, you’ve probably said something like it. E-commerce is one of the easiest businesses to start and one of the trickiest to fund, because the money leaves long before it comes back.
This guide explains where the cash goes, how to measure the gap, and the habits that keep a growing store solvent.
Why do profitable online stores run out of cash?
Profit is an accounting number. Cash is what’s in the bank on Tuesday. The two drift apart in e-commerce because of four timing gaps:
- Stock is paid for before it sells. Supplier deposits, balances, freight and customs can all be paid weeks or months before a customer orders.
- Payouts lag sales. Payment providers hold funds for a settlement period. Shopify’s help centre says Shopify Payments in NZ has a minimum settlement period of three business days, new stores often start longer, and weekend payments are grouped (Shopify). Buy-now-pay-later providers and marketplaces have their own schedules.
- Ads are billed as you spend. Meta and Google charge your card on thresholds or daily, well before the orders they generate have paid out.
- Tax arrives in lumps. GST returns and provisional tax are due on fixed dates regardless of what your bank balance looks like.
When you grow, every one of these gaps gets bigger. That’s why growing stores often feel poorer than stable ones.
Measure your cash conversion cycle
The cash conversion cycle is the number of days between paying for stock and receiving cash from selling it. For an online store:
Cash conversion cycle = days stock sits before selling + days to get paid − days of credit your supplier gives you
Example: stock takes 45 days to sell, payouts take 4 days, and your supplier wants payment 10 days after shipping. 45 + 4 − 10 = 39 days your cash is tied up.
Now multiply by growth. If you’re doubling your order size, you need roughly double the cash sitting in that 39-day hole.
Build a simple weekly cash forecast
You don’t need fancy software. A spreadsheet with 13 columns (one per week for a quarter) and these rows will do:
Cash in: payment-platform payouts, marketplace payouts, BNPL settlements, wholesale invoices paid.
Cash out: supplier payments (deposits and balances), freight and customs, ad spend, 3PL or packaging, wages and contractors, software, rent, GST and income tax, loan repayments, your drawings.
Update it every Monday with actuals. The magic isn’t accuracy — it’s seeing a crunch six weeks away instead of the day it arrives.
Inventory is where the cash hides
For most stores, stock is the biggest use of cash. Some rules that help:
- Know your sell-through by SKU. Which products turn in 30 days and which sit for 120?
- Go deep on winners, shallow on tests. Order proven lines in volume; order new lines small and reorder fast if they work.
- Watch your “dead stock” number. Stock that hasn’t sold in 90+ days is cash on a shelf. Bundle it, discount it or donate it — then stop reordering it.
- Negotiate terms, not just price. A 60-day payment term can be worth more than a 3% discount.
- Plan for peak early. Q4 stock often needs paying for in August–October. See our peak season planning guide.
Set tax aside automatically
A surprisingly common cash crisis for young stores is a GST return they didn’t save for. Once you’re GST registered, 3/23 of every GST-inclusive sale is tax you’re holding for Inland Revenue (minus GST on your costs).
A simple system: every time a payout lands, move a fixed percentage to a separate “tax” savings account. Ask your accountant to help set the right percentage for GST and income tax. If you’ve recently crossed the $60,000 threshold, read our GST registration guide.
When is funding the right fix?
Funding is a good fix for timing problems and a bad fix for margin problems.
- Timing problem: you’re profitable per order, but the cash cycle is stretching as you grow. A line of credit is designed for this — draw when the gap opens, repay as payouts land.
- One-off lump: a big stock order or container. A term loan or import order funding can suit.
- Margin problem: you lose money on each order after ads, shipping and returns. Borrowing just lets you lose money faster. Fix pricing, AOV or ad efficiency first — our unit economics guide shows how.
A cash flow checklist for online stores
- All payouts land in one business bank account
- Weekly 13-week cash forecast, updated every Monday
- Cash conversion cycle calculated and tracked
- Tax savings account with automatic transfers
- Sell-through tracked by SKU; dead stock reviewed monthly
- Supplier terms negotiated in writing
- A buffer (cash or an unused line of credit) for surprises
Red flags in your forecast
Watch for these in your weekly forecast: the lowest projected balance dropping below one month of fixed costs, supplier payments bunching in the same fortnight as a GST return, and ad spend rising faster than payouts. Any one of them is a cue to act early — renegotiate a payment date, stage an order, or arrange a facility before you need it.
How Business Loanz helps
When your store is healthy but growing faster than your cash, we help you find funding that fits the gap — from lines of credit for stores trading about six months or more, to property-secured loans for newer businesses. Start with our e-commerce business loans page, or enquire in about 60 seconds without affecting your credit score.