3 Tips to Improve Cash Flow in Your Amazon Business
Exits are a hot topic in the Amazon landscape as we see more aggregate companies acquire more Amazon brands than ever before. Yet, 32% of business owners don’t know how to value their business, and a large number of Amazon sellers, in general, do not have a solid footing in their own companies’ numbers.
Cash flow is required to scale an Amazon business and formulate a healthy exit strategy in the long term. Unfortunately, many sellers struggle to properly mitigate cash flow leaving their business and exit strategy hanging in the balance.
We understand the importance of cash flow to a healthy Amazon exit strategy. Because we are an Amazon reimbursement solution company, helping you alleviate cash flow concerns is our priority. This article will outline 3 tips to prove cash flow in your Amazon business.
#1 Understanding Your Numbers
It doesn’t matter what type of business you’re running; understanding your numbers is crucial to your success. Even the most experienced Amazon sellers can sometimes fall short in managing their numbers, and whether a newbie or advanced seller, poor fiscal management can mean you don’t know what cash is incoming or outgoing. You can have extremely high profit margins, but you can find your business in a downward spiral without proper accounting and education.
Some great tools to help you learn about your numbers while also managing your accounting needs are:
- Quickbooks – An accounting software geared towards small and medium-sized businesses that offer accounting applications, business payments, bill payment, and payroll options. Take advantage of the resource section in Quickbooks and have some patience. It may take some time to understand your business’s accounting fully.
- Dext – Software that provides real-time accounting insights with automatically checked data. Easily track your spending with the snap of a photo. Dext is like a real-time receipt bank with various other accounting features.
- ConnectBooks– A user-friendly software tool that is specially tailored for Amazon sellers, and helps Amazon sellers track their actual profits in real-time. It also connects and integrates with QuickBooks for a perfect synergy.
Create a monthly budget and be accountable for that budget. Many cash flow issues are caused by poor understanding and lousy spending choices, don’t let that be you.
Preparedness is everything when it comes to managing cash flow, and a well-orchestrated financial plan will help you see the best-case scenarios and viability of your business.
#2 Amazon Payment Disbursements & Funding Options
Selling on Amazon means playing, and at times paying, by Amazon’s rules. Amazon sellers can wait weeks before receiving payouts, and while this is normal and how the platform operates, it can also slow a business’s ability to scale to a screeching halt.
If you’re facing cash flow challenges, you may be unable to float the necessary costs to grow your business. Examples included limited inventory order quantities, lack of 3PL services, minimal marketing, etc. All of these are almost essential to an Amazon business in today’s e-commerce climate, and without access to cash, taking advantage of these tools can be limited.
Selling on Amazon is unique, and in some instances finding lenders can be challenging as lenders may not understand the intricacies of how the platform operates in comparison to the real world. A lack of understanding can mean certain institutions are less likely to work with Amazon sellers, or where the programs’ rates and functions don’t make sense.
On the bright side, with demand in the Amazon FBA market often comes innovation and ingenuity. Payment funding options have become the norm to help Amazon sellers alleviate cash flow problems. Here are a few examples of payment funding options available on the market:
- Payoneer – provides international payment solutions for Amazon sellers, amongst other funding solutions.
- Payability – Offering capital advances and/or daily payout structures.
- AccrueMe – While not a payment solution, AccrueMe is a growth capital provider that sellers can use to get cash and only pay for the growth it generates in profits.
- YardLine Capital – A financial accelerator tailored to Amazon sellers. They focus on providing growth capital and growth consulting services.
- StorFund – A multi-currency funding provider for e-commerce sellers.
#3 Improve Cash Flow in Your Amazon Business with Your Friends & Family
It sounds like the most straightforward thing to do, but asking people for money is always a difficult conversation.
Everyone’s financial situations are different, and if an Amazon seller is not yet a registered LLC, they may not qualify for some of the payout lending options available.
You may be surprised who is interested in helping you fund your business, though, so it’s worth a shot. Be sure to have a contract in place, as I owe you notes are not an option when borrowing money.
Consult legal advice and create a contract all parties are happy with. Terms should be crystal clear from the outset, even if seeking profit share options instead of lending.
Being resourceful and finding alternative methods of alleviating cash flow problems can be pivotal to your business’s livelihood. GETIDA can also assist by providing an Amazon FBA reimbursement solution that is another area you can reign in on your cash balances to scale your business.
While cash flow issues can be overwhelming and frustrating, having a proper financial game plan in place from the time you launch on Amazon can prevent undue stress and worry.
Managing your business money effectively from the outset can help you navigate both positive and negative cash flow balances and allow you to scale your business to its full potential. Healthy numbers mean ease of exit if the long-term goal is to sell. Overlooking cash flow issues can not only harm your Amazon business in the short term, but they can also prevent an exit from coming to fruition.
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