E-commerce free cash flow calculator
Short answer: Free cash flow for an e-commerce brand is cash collected minus what you pay for inventory, ads, operating costs, capital spending, and debt service. It is usually much lower than revenue minus gross margin suggests. Enter your own monthly numbers below; nothing is stored.
E-commerce free cash flow i
Why bank balance and profit both mislead
A healthy bank balance can be mostly spoken for: supplier invoices due next week, a loan payment, and a committed ad budget. Profit on the P&L can also run ahead of cash when inventory is building or payouts are delayed. Free cash flow after obligations is the number to make spending decisions on.
“people will see money in a bank account, but they don’t really care about like, oh, I owe the supplier this, or oh, I owe this much on my loan.”
— Saman Izadiyar
“the amount that’s in the bank and the amount that you think you’re profiting versus how much cash you actually have is widely different.”
— Saman Izadiyar
How to use the result
- Negative monthly free cash flow means the business is funding itself from cash on hand or debt. That can be a plan (building inventory for a launch) or a warning.
- Cash after near-term obligations is what is actually free to spend this month.
- Run it per channel if you can. A channel with strong revenue but heavy ad spend and fees may be consuming cash.
The calculator is only as good as the inputs. If your books are behind or payouts are not reconciled, start there. See Shopify accounting: payouts and clearing accounts and the weekly numbers e-commerce owners watch.
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Frequently asked questions
How is free cash flow calculated here?
Monthly free cash flow = cash collected minus inventory purchases paid, ad spend, other operating costs paid, capital spending, and loan payments (principal and interest).
What is cash after obligations?
Bank cash plus pending marketplace payouts, minus accounts payable due in the next 30 days and the next loan payment.
Is this the same as accounting free cash flow?
It is a simplified owner's view. Formal free cash flow starts from operating cash flow and subtracts capital expenditures; debt service is usually shown separately.
Does this store my numbers?
No. The math runs in your browser and nothing is uploaded.
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See Ottit’s profileRelated reading: e-commerce profit margin calculator, cash-flow forecasting process, margin visibility for founders.
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Quotes and client examples are what Saman Izadiyar described; they are not a guarantee of results.