In this article, we will talk about managing your Amazon cash flow
Effective cash flow management is crucial for the success of your Amazon FBA business. By managing your cash flow, you can ensure that you have enough funds to cover your expenses and reinvest in your business. I'm here to share my expertise and give you the tools you need to manage your cash flow with ease. This includes my secret sheet, which has been proven to help businesses scale and grow.
What is cash flow?
Cash flow is the total amount of cash being transferred into and out of a business. Cash received represents inflows, while money spent represents outflows. Quite simply, cash flow refers to the movements of money entering and going out of a business, typically from operations, investing, and financing.
In an Amazon business, your cash flow is your sales while your outflows are your expenses such as cash for stock purchasing. Now, if you don’t balance and manage your inflows and outflows or your revenue and spending, you might get a loss in your business or worse, bankruptcy. Manage your Amazon cash flow in your business correctly and your money is always working the best it can do within your business.
But how can your Amazon business benefit from managing your cash flow?
What are the benefits of properly managing your Amazon cash flow?
Let me share with you 3 benefits your Amazon business can get if you manage your cash flow.
Saves you from future expenses
Now I think this is one of the things that some Amazon sellers don't see. Some Amazon sellers say that as long as they can pay the bills in their Amazon business, they think that the business will keep going but what they don’t know is that they are killing their business little by little.
In Amazon cash flow has two categories. First is the inflow or the money that is entering your business, let’s say your sales. The second one is the outflow or the money that goes out of your Amazon business. Of course, these are your expenses, like cash for purchasing, your bills, and other costs.
Now the rule in managing your Amazon cash flow is that your outflow should not be bigger than your inflow. When this happens, this means that your expenses and bills are too high than what you can earn. If you failed to see this, you may not be aware but your Amazon business is starting to go bankrupt. Managing your cash flow in your Amazon business will forecast your cost and expenses and with this, you can prepare your cash in your business to pay these.
Provides a safety buffer!
One of the best things I get from managing my Amazon cash flow is having an amount in my bank account which I can use in case of a business emergency. This is very important because we can’t tell what may happen next. By having a safety buffer in my Amazon business, I can make sure that I can still make my business operate even when unexpected circumstances happen.
Before I show you how I manage my cash flow, let me first show you what are the factors you need to consider when managing your cash flow.
What should you consider in managing your Amazon cash flow?
Before you properly manage your Amazon business's cash flow, it is important to know when your inflows and outflows move or “time”. By considering this, it will help you how you can budget your cash and spend it accordingly and on time for paying the bills without getting bankrupt.
Amazon Disbursement funds system
This is how long Amazon disburses your sales in your payment account. Normally, Amazon will disburse every 14 days or 2 weeks. Taking consideration of this is important because the cash you will get from this is your cash inflows which you need to pay for your cash outflows. Now since this is disbursed every 14 days, you can plan your cash for your payments accordingly to avoid getting out of cash in your cash flow.
If you’re using a credit card to purchase your stock, then this is also a big consideration if you want to manage your cash flow. As you can see, credit cards give you additional cash for your business. With this, we can say that this is your cash inflow and also your cash outflows.
Now you should always make sure when you should pay your credit card bills. By knowing this, you can prepare funds and pay your credit card bills without running out of cash in your capital and getting flooded by debts.
Get the Cash Flow Management Sheet
“Cash flow is the lifeblood of your Amazon FBA online arbitrage business.” This cliché has probably been heard numerous times by now, but that doesn't make it any less true. To successfully run an Amazon business, ample cash to purchase inventory, pay up bills, and salaries, and hopefully keep something for yourself is essential.
How to manage your Amazon cash flow in your Amazon business
In my Amazon business, I use cash flow management which I made and developed for 4 yrs in my Amazon journey. This cash flow management sheet helps me to guide how to manage my cash flow, specifically:
- Manages my credit card expenses and limits.
- Plans my cash flow for 14 days
- Guides me on my expenses such as giving me limits to my expenses.
If you want to learn more about how I manage my cash flow effectively, you can watch it here. I gave an in-depth tutorial on how I did it in my Amazon online arbitrage business.
Now, always remember that this cash flow management sheet is just a guide for me, I always have my admin Amazon virtual assistant check and review this and report this to me every week. By using this cash flow management sheet guide, I can spend a large amount of cash for my stock while still paying bills in my Amazon business like my credit cards.
When are you going to start utilizing your Amazon cash flow?
As an Amazon seller, negative cash flow can completely stifle your operation's growth. Managing your cash flow has a vital role in upgrading your Amazon business.