In this article, let’s talk about how to use the Amazon FBA Cash Flow Spreadsheet.
Are you worried about not having enough cash in your Amazon business when you need it? In this article, I’m going to show share with you how to use your Amazon FBA cash flow spreadsheet to help you become financially stable, and know exactly how much money you can spend in your business on stock every single week.
If you find that this concerns you and your business needs, read on.
Introduction to Amazon cash flow spreadsheet
What is cash flow? Cash flow refers to the movement of money entering and leaving your business, usually from operations investing, and financing. In any Amazon business, cash flows are going to come in. They could be your sales (i.e. disbursement from Amazon), while your outflows are going to be expenses, staff, tools, but also stocks that we purchase.
Now, if you don't balance these right and get your inflow (cash coming in) the same as
your outflow, you might go into a negative cash flow situation (i.e. where you spend more than what you’ve got coming in). This is a problem because your business doesn't have enough money to pay the bills which can cause you to go bankrupt. but if you manage this correctly, you're able to not only understand how much money is coming in and cover the costs, but you're able to know exactly how much you can spend to ensure that you're going to invest all the money you can into stock.
If you do this right, it’s going to really scale your business. Do it wrong. You’re just wasting resources, leaving money on the table, and slowing down the growth within your Amazon business.
Top things to track on your Amazon cash flow spreadsheet
Amazon Disbursement Funds System (inflow)
Your inflow money coming into your business is going to be your Amazon disbursements. this is how Amazon gets your sales into your account or bank account, for you to spend.
Normally, once you’ve had a sale, Amazon will hold on to that money for 14 days in case of any refunds. After those 14 days, you can then disperse that money into your bank account. Generally, you’re not going to get that money for about 14 days after you’ve sold it, but also keep in mind that sometimes through banking, it can take another couple of days up to three to five days for that money to go from Amazon’s bank account into your bank account. Before it becomes available, be mindful of that.
Credit card (Charge cards)
If you’re using things like credit cards to purchase your stock then this is going to be a big consideration if you want to manage your cash flow, you use credit cards to give you additional cash which you can buy stock with, and also to help manage your cash flow within your business.
Now, the one thing you should always make sure of is that you’re able to pay your credit card bills on time, by knowing this, you can prepare your funds or have the money ready to pay your credit card bills without running out of cash. Obviously, this ensures that you’re not going to be flooded with debt.
This is really important to maintaining a good credit rating within your business. Not being able to pay your debts is going to be a big problem.
Your expenses are going to be the money coming out, the money you’ve got to pay out of your business. Maybe every single day, every week, every month, knowing when these expenses are going to come out, it’s going to be key in the calculation to ensure that you can manage your cash flow correctly.
Now, for us in our business, expenses can be things such as tools we use, like Keepa for example, but in addition to that, paying staff, wages, the Amazon seller fee, then even things like loan repayments, credit required repayments, we’ve got to factor them in.
Once we know all of these details, the income, the available credit, and the expenses, only then can we actually start looking at how much money we can invest into stock for that time period.
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How to use the Amazon cash flow spreadsheet
I personally use the Amazon FBA cash flow spreadsheet between the two of my 7-figure businesses in the USA and in the UK because once you understand the money coming in, the available credits, and the money going out, it gives you one number which tells you “This is how much you can spend this week”. Safely investing in stock, cover your bills next week, and this week as well.
Step 0: Set up
This is pre-set, but if you want to change it, you can. When you make sales, Amazon usually puts that money in their disbursement account. They’ll hold that money for 14 days, and when you click the disburse button, Amazon will get a percentage of it and will send you your money.
Let’s say that I made £10,000 and when I click the disburse button, I’ll only get £5,000. What does that mean? It means that I have £5,000 left in the disbursement account. So that makes you think that you’re going to get £5,000 next week, but that’s not the case. You’ll get a little less than that. You’ll find that there may be a 25% reduction.
In step 0, you focus on that information, based on the information you receive about the money in your disbursement account and the amount of money you receive once you do click the disburse button. You will use that information to forecast next week's income statement while taking into account the percentage reduction taken by Amazon.
Step 1: Where all your money is - record this and cash out Amazon every Monday
In this step is where you’re going to be really looking at the inflows and at all the available credit and cash. So, in this step, the first thing I do is literally every single Monday, I log into each one of my accounts and I’m going to record how much is encashed in those bank accounts, and if you have an overdraft, I’ll add that onto the statement as well.
The second thing to do is list all your charge cards, supplier credit accounts, and your credit cards, while also encoding their limits, and also recording their current balance.
Then we move over to the Amazon account and their respective markets and record the total amount and balances of each disbursement account. The final task that needs to be accomplished in this step is recording the remaining amount left inside the disbursement account after you click the disburse button, per the account.
Step 2: What are your future costs?
The first thing you’re going to want to do is to fill out and encode all the Reminders of Big Monthly Costs if you’re just starting out. My advice for you is to get your bank statements. We are looking for your expenses that are not stock related.
What you’re looking for are all the costs that you have to pay every single month. Generally, the bigger costs are what we’re aiming to record first. You need to fill out how much you owe each month, then also the corresponding date that you have to pay them.
Then you’re going to want to record all of your expenditures for the specific week that you’re in. We do this forecasting this week while ensuring that these expenses can still be covered. After this, you’ll have to calculate the expected expenditure for the coming week.
Through all the information you have provided, the Amazon FBA cash flow spreadsheet will provide you with the following information:
- Cash available
- Credit available
- Cash Incoming
- Total available spend this week
The Amazon FBA cash flow spreadsheet will then create a cash-flow planner, which will map out all the expenditures for this week and a forecast for the coming week.
Step 3: Calculate the safe maximum spend
The safe maximum spend is where you know how much money is coming in, and how much money is going out and we do calculations to make sure that not only can we meet our expenses this week but we can also meet our expenses next week.
What we’re going to be looking at right here will be how much money will be coming in and the credit card availability. The Amazon FBA cash flow spreadsheet will create a forecast for the current week, while also forecasting the next week.
It provides the following information in the current week's forecast table.
- Estimated funds available
- Max spend
- Calculated max spend for the week (Make this as large as possible)
- Spend before amazon disbursement arrives in the bank
- Net difference
It provides the following information in the next week’s forecast table:
- Estimated funds available
- Net difference
- Never let the net difference go into the red, or you will run out of money to pay your bills
Step 4: Take action
The FBA cash flow spreadsheet will have a table of the actions that you need to take, and the amounts that you need to pay. You need to take a record of these values and communicate it directly to your team, or any other person who is assigned to deal with these financial decisions.
The information provided to share/record/spend:
- Maximum spend for the week (The cash value you want to know)
- Do not spend more than this amount before a set date
Top tips for you for using the Amazon FBA cash flow spreadsheet
Now, when using the Amazon FBA cash flow spreadsheet to make business decisions, it is important to make sure you enter all the data right. Obviously, you can be able to make informed decisions on that now.
Here are some top tips that are going to really support you in making well-informed decisions.
Regularly review your records
Go through your expenses at least once a month, regularly to make sure that all transactions going to a bank statement are correct as to what cash flow spreadsheet that is. The last thing you want is bills coming out that you haven’t forecasted. That’s going to cause a problem
Use data for informed decision making
Going through your spreadsheet is going to help you understand what money is coming in, also what your available cash is, and all the expenses going out. Make sure that you’re communicating that amount, which is the available cash, to your team or to the people that need to know what needs to be paid at the right time to make informed decisions in your business.
There’s no point filling out a cash flow spreadsheet if you are not able to use that information to help grow your business.
Spend all the money now
Once you go through the cash flow spreadsheet and we do it every single week on a Monday, that’s the way it’s set up to work. You now have enough information or knowledge to know how much you can spend every single week.
It should help you manage your business to make sure you have a safe spend, whilst maximizing the amount of cash you invest into stock. Now, once you understand that number and also we put it in, you can spend up to that amount.
Make sure you invest it and make sure you manage it.
Monitor your cash flow balances
When you first start implementing the cash flow spreadsheet, it could be that you’re doing something wrong or maybe you’re not using it correctly. I recommend making sure that you’re actually managing your bank statements every single day, just watching them make sure that everything is correct.
Mistakes can happen and generally because of unfolding consequences, so check out every single day and make sure it works. That’s going to be really important for you to make sure that the cash flow sheet is working in your business.
FAQs around actually how to use the Amazon FBA cash flow spreadsheet
How do I account for loans on a spreadsheet?
Amazon loans are just another expense. You don’t actually worry about the loan itself or the balance of the loan. All you’re worrying about is the amount of cash that you have to pay every single month.
So, the one thing you need to understand about Amazon loans is that Amazon will take the money out of your disbursement. You don’t take the disbursement and pay Amazon back.
What I would do is go down to my actual cost here, and I call it Amazon loan repayment. I would put in the amount that I’m actually having to repay 200. Now I put the date on and generally that’s going to be the end of the month. Obviously, look at your loan agreement for this information.
Now, what you will notice is that while technically in the way it works, Amazon loan repayment won’t come out of your income. That amount will reduce your Amazon total balances. It’s best to visualize it as a £200 deduction to your income, rather than a £200 expense.
The way we deal with it is by putting it into the expenses tab and accounting for it that way, but we don’t have to pay it because they’re already being paid by the disbursement.
What to change if you do bi-weekly disbursements?
Leave the Amazon disbursement this week as it is. It is absolutely fine. But set the total balance to zero, because when you do the Amazon disbursement this week, you know how much money is coming out. That’s fine, but you’re not going to get any more the following week.
So, if you’re doing it every two weeks, just leave your total balance as zero, but do your cash out as the amount of money you’re getting. That’s going to help you out.
Can you do daily disbursements in the Amazon FBA cash flow spreadsheet?
You obviously can build the spreadsheet that way. The reason we don’t do that daily is that if you cashed out today disbursement-wise and Amazon paid us the money today disbursement-wise, absolutely fine, I’d be very happy. But because it doesn’t really work, that way because Amazon or the banking system takes a few days to get the money, it starts causing overlap. What does this mean? It means I’m cashing out money today, which won’t come into my bank account for the next three days, and then tomorrow. I’m going to cash out again. I’ve got more money coming in three days, so multiple days of money going out and it gets really complex.
One thing I want to do within my business is I just want to keep it simple. Managing your cash flow every single week is simple, but doing it every single day turns into a simple job complex. The more complexity you have, the more errors we’re likely to make, and definitely, we don’t want any errors in our spreadsheet.
In conclusion, yes you can do daily disbursements with Amazon, but I won’t be able to recommend it, just do it weekly, every Monday. It’s going to support you in knowing where your business is at now.
Your safety buffer is the amount of money you want to make sure you’ve got in the account, every single week, at all times, to ensure that if you’ve got any unexpected expenses, you can cover them.
For you, what you might want to do is make a big safety buffer to start with, around £4,000 to £5,000, and then start bringing them down once you’ve gotten comfortable with your cash flow.
Use the Amazon FBA Cash Flow Spreadsheet today!
After understanding how to use the Amazon cash flow spreadsheet, you might be interested in knowing how to manage Amazon's cash flow for 2023. And also, how to get Amazon cashback for your Amazon UK business.
You may also want to learn about the complete guide to Amazon inventory management which I made a video on which you can watch.