The money flow of an online seller
Online sellers pay suppliers and ad platforms first, then collect from customers through card processors or marketplaces, usually after a delay. Each channel takes fees, holds reserves for returns and pays out on its own schedule. The result is that profit on paper and cash in the bank are often far apart.
Keep separate pots of money
- An operating account that receives payouts and pays suppliers.
- A tax pot, so sales tax or VAT collected is not spent.
- A dedicated card for each ad platform, so spend is capped and traceable.
- A reserve for refunds and chargebacks.
Payouts in several currencies
Marketplaces and processors pay out in the currency of the sales channel. Receiving into an account that holds that currency, and converting when it suits you, usually costs less than letting each payout convert at a bank's rate. Compare the total cost, not only the headline rate.
Sales tax and VAT
Rules vary widely. In some countries and for some marketplaces the platform collects and remits tax for you, and in others you must register and file yourself, sometimes in several jurisdictions as you grow. Get advice early, and choose accounting software that records tax by region.
Inventory and cash
Stock is cash sitting on a shelf. Track what you hold, what it cost and how fast it sells, so you do not order more than you can sell. If you borrow to buy stock, compare the total cost and make sure repayments follow your sales cycle.
Common mistakes
- Treating gross sales as profit and spending accordingly.
- Ignoring fees, returns and ad costs when pricing.
- Mixing personal and business money.
- Missing registration thresholds for sales tax or VAT.
- Over-ordering stock because last season was strong.
Wallester Business
Ramp
Pleo