Cashflow issues are one of the most common challenges eCommerce founders face - and yet, they’re rarely talked about openly. It can start with something small: a slower-than-expected sales month, an overdue VAT bill, or a supplier demanding early payment. Before you know it, you’re juggling late payments, maxing out credit cards, and wondering how you’re going to pay next week’s invoices.

Sound familiar? If you’re nodding along, you’re not alone. Many eCommerce businesses hit this wall at some point - it doesn’t mean your business is broken, but it does mean it’s time to take action. Fixing cashflow issues isn’t easy, but it’s possible. The key is recognising the signs early and having a plan in place to regain control.

Here’s how you can take charge of your business cashflow before things get out of hand.

Let’s start with the basics. Business cashflow is the money coming into and out of your business. Positive cashflow means you’re earning more than you’re spending, giving you the flexibility to pay bills, invest in growth, and weather tough months. Negative cashflow, however, means you’re spending more than you’re earning - often leading to borrowing, delayed payments, and, eventually, big headaches.

In eCommerce, cashflow problems are especially common. Why? Because the model is cash-heavy upfront. You pay for stock, advertising, and shipping before you ever see the money from your customers. And if sales dip or costs rise unexpectedly, you can quickly find yourself in trouble.

Example:
You’ve just spent £20,000 on a big shipment of inventory to prepare for Black Friday. Your ad campaigns are running, and sales are coming in. But there’s a catch: Stripe holds your funds for seven days, and your supplier wants payment within 30 days. Suddenly, you’re scrambling to pay for next month’s ad spend while waiting for cash to hit your account. This gap - between when you spend and when you get paid - is where most cashflow problems begin.

Cashflow issues rarely hit you all at once. There are usually small signs that things are starting to go wrong. If you can spot these early, you’ll have more options to fix them. Here are some common red flags:

1. Constant Discounts to Drive Sales
   Running sale after sale might bring in revenue, but it often leaves you with little actual profit. If your discounts are becoming a lifeline rather than an occasional promotion, it’s time to reassess.

2. Borrowing to Cover Day-to-Day Expenses
   Using loans, credit cards, or merchant cash advances to pay for inventory, advertising, or supplier bills is a clear sign that your cashflow needs attention.

3. Overdue Payments
   If you’re delaying payments to suppliers or struggling to pay recurring bills (like your Shopify subscription or email marketing fees), it’s time to take action.

4. No Cashflow Forecast
   If you don’t know exactly how much money is coming in and going out over the next three months, you’re flying blind - and that’s a recipe for trouble.

When cashflow problems strike, the worst thing you can do is ignore them. Instead, take proactive steps to understand what’s happening and make changes. Here’s how to do it:

1. Create a Cashflow Forecast

A business cashflow forecast is your roadmap to regaining control. It’s a detailed plan showing how much money you expect to come in and go out each week or month. By mapping this out, you can spot cashflow gaps before they become a crisis.

• How to Start:
  • Write down all expected income, like sales and tax refunds.
  • List all outgoings, including stock, ad spend, wages, and software subscriptions.
  • Be honest. Don’t underestimate expenses or overestimate income - this is your chance to get a clear picture of your finances.

Example:
You might find that in January, your sales typically drop by 40% after the holiday rush. Knowing this ahead of time allows you to adjust your spending or plan a January promotion (not flash sale!) to keep revenue steady.

2. Talk to Suppliers Early

If you’re struggling to pay a supplier, don’t wait until the payment is overdue. Most suppliers would rather work with you to find a solution than risk losing your business altogether.

• What to Say:
  • Be honest about your situation. For example, explain that your funds are tied up with payment processors and ask for an extension.
  • Propose a realistic payment plan, such as splitting the payment over two months.

Example:
Imagine you owe a supplier £15,000, but your cashflow forecast shows you’ll only have £10,000 available this month. Call the supplier, explain the gap, and offer to pay £7,500 now and the rest next month. Most will appreciate your proactive approach.

3. Optimise Your Average Order Value (AOV)

Increasing your average order value (AOV) is one of the fastest ways to boost cashflow without spending more on ads or attracting new customers.

• Practical Ideas:
  • Offer free shipping on orders over a certain threshold.
  • Create product bundles that offer slight discounts compared to buying items individually.
  • Use upsells and cross-sells during checkout.

Example:
If your average order value is £35 and you set a free shipping threshold at £50, many customers will add an extra item to qualify - boosting your revenue without needing more sales.

4. Cut Costs (But Be Strategic)

When cash is tight, reducing expenses is a natural response. But it’s essential to cut costs in a way that doesn’t hurt your long-term growth.

• What to Focus On:
  • Cancel unused tools or subscriptions (e.g., that analytics platform you haven’t logged into in months).
  • Renegotiate contracts with suppliers or service providers.
  • Look for cheaper shipping options or consolidate shipments to reduce fulfilment costs.

Relatable Example:
One eCommerce founder saved £1,200/year by switching to a more affordable email marketing platform that still met all their needs.

5. Avoid Over-Discounting

Instead of slashing prices to generate quick sales, focus on creating value-driven offers. For example:

• Offer free gifts with orders over a certain value.
• Run limited-time promotions on specific product bundles.
• Focus on scarcity-driven campaigns like “limited stock” or “last chance” to create urgency without gutting your margins.

Cashflow problems don’t solve themselves - they get worse the longer you ignore them. Acting early gives you more options to fix the issue, such as negotiating with suppliers, adjusting your spending, or tweaking your marketing strategy. It also helps you avoid bigger problems, like running out of cash entirely or damaging your relationships with suppliers.

Remember, many eCommerce businesses have faced cashflow challenges and come out stronger. The key is recognising the problem and taking steps to address it before it spirals.

Cashflow problems are a normal part of running an eCommerce business - but they don’t have to be a permanent one. By creating a cashflow forecast, talking to suppliers, and optimising your operations, you can turn things around and build a more resilient business.

Key Takeaways:

• Use a cashflow forecast to map out your income and expenses.
• Negotiate payment terms with suppliers to ease short-term pressure.
• Increase your AOV with bundles, free shipping thresholds, and upsells.
• Cut unnecessary expenses while protecting growth areas like marketing.

If you’re feeling stuck, remember: taking small, proactive steps now can make a huge difference. Need help creating a forecast or working out a strategy? Reach out - we’re here to support you.

• Am I relying on discounts to drive sales?
• Do I have a clear understanding of my cashflow?
• Which expenses could I reduce without harming my business?
• Am I maximising the value of each customer transaction?
• Have I communicated proactively with my suppliers and creditors?
• Am I acting early enough to prevent future problems?