When your next inventory bill comes due, is the cash already there?

For most ecommerce owners, the honest answer is no.

Out of over 200 ecommerce owners who took our Assessment, only about a third said they consistently set aside cash from sales to pay for their next inventory order.

The rest are scrambling when the bill comes due. Reaching for a credit card, delaying a supplier payment, borrowing against sales that haven’t happened yet.

I understand why. When a payout hits your account, it feels like yours to use. Payroll needs it, ads need it, a dozen things need it right now. The next inventory order feels far enough away that it can wait.

Except it never actually waits. It just shows up at the worst possible moment.

The Inventory Account Mechanic

Here’s the mechanic I teach every client, straight out of Profit First for Ecommerce Sellers.

Every time a payout hits your account, immediately move a percentage of it into a separate Inventory account.

That percentage should roughly match your cost of goods sold as a percentage of revenue. If your COGS runs 30% of revenue, move 30% of every payout.

Don’t touch that account for anything else. Not payroll, not ads, not a good month where you feel flush.

When your next purchase order comes due, the cash is already sitting there. You’re not scrambling or reaching for a credit card, and you’re not borrowing against sales you haven’t made yet.

You’re pre-funding your next order with the revenue from your current sales.

It’s a small mechanical shift, but it changes the entire feeling of running the business. Instead of dreading the next inventory bill, you already know it’s covered.

If you’re in the two-thirds who aren’t doing this yet, this is the week to open that account.

If you want to know where you stand, take our Ecommerce Business Performance Assessment.

Then let’s talk about how to change it.

Cyndi

Quick Summary

• Most ecommerce sellers don’t have cash set aside for their next inventory order, so they scramble with credit cards, delayed supplier payments, or borrowing against future sales.
• The fix is a dedicated Inventory bank account funded from every sales payout, based on the Profit First for Ecommerce Sellers method.
• Move a percentage of each payout equal to your COGS percentage of revenue into that account, and never touch it for anything else.
• This pre-funds your next purchase order with revenue you’ve already earned, removing the scramble and the guesswork.

Frequently Asked Questions

How much cash should I set aside from each payout for inventory?

Set aside a percentage that matches your cost of goods sold (COGS) as a percentage of revenue. For example, if COGS runs 30% of revenue, move 30% of every payout into a dedicated Inventory account.

What is the Inventory account method in Profit First for Ecommerce Sellers?

It’s a cash management practice where a seller opens a separate bank account solely for inventory funding, and transfers a set percentage of every sales payout into it immediately, rather than letting it sit in the general operating account.

Why do ecommerce sellers run out of cash for inventory?

Payout cash tends to get absorbed by immediate needs like payroll and ad spend. Without a dedicated account and a consistent transfer habit, sellers reach the next inventory bill with no cash reserved, forcing them to use credit cards or delay supplier payments.

How do I know if my business has a cash flow problem with inventory?

Take the Ecommerce Business Performance Assessment to see how your current cash flow habits compare to other ecommerce sellers and where the gaps are.