Updated · Consult EFC
When ecommerce growth needs closer financial control
More orders can increase pressure on cash when suppliers need payment before customers buy. At the same time, a strong advertising dashboard may exclude refunds, fulfilment costs and marketplace charges. A founder needs a joined-up view before increasing spend or placing a larger stock order.
This service is relevant when product margins are unclear, cash falls despite sales growth, or different channels report conflicting results. It can work alongside your existing accounting team. Specialist tax, customs or legal advice should be scoped separately where needed.
Ecommerce contribution margin beyond ROAS
Return on advertising spend compares attributed revenue with advertising cost. It does not, by itself, show profit. Reconcile channel revenue with discounts and returns, then consider product cost, payment fees, fulfilment, shipping support and acquisition spend. State whether figures exclude VAT and avoid counting the same cost twice.
Compare products and channels on the same basis. A marketplace may include costs that a direct-to-consumer report records elsewhere. Attribution windows and repeat purchases also affect interpretation, so a single platform dashboard should not determine the entire budget.
Worked example: what remains from a £100 order?
Assume £100 of net revenue after discounts and returns, excluding VAT. Deduct £35 product cost, £10 fulfilment and shipping, £3 payment fees and £25 advertising acquisition cost. The remaining contribution is £27, or 27%, before fixed overheads.
If acquisition cost rises to £35, contribution falls to £17. This simplified hypothetical example excludes other possible costs and is not a client result. Your model should include the costs that apply to your business.
Use the contribution to test how much remains for salaries, systems and other overheads. Avoid treating a positive order contribution as proof that the whole business is profitable.
Stock purchasing and ecommerce cash flow forecasting
Map supplier deposits, final payments, lead times and expected sell-through. Include cash already committed to purchase orders, not only invoices recorded in the accounts. Slow-moving stock can tie up money while popular products still require replenishment.
Build a base case and a slower-sales case. Test delayed stock arrivals, higher return rates and the timing of marketplace payouts. Seasonal trading needs a view of when cash leaves the business as well as when revenue is recognised. Connect this work to cash flow forecasting.
What an ecommerce CFO engagement can deliver
- A reconciled product and channel contribution view.
- A stock and purchasing cash calendar.
- Advertising scenarios connected to contribution and cash.
- A focused monthly performance pack with agreed definitions.
- A list of practical decisions, assumptions and data gaps.
Useful inputs include recent accounts, sales exports, returns data, advertising spend, stock reports and supplier terms. You do not need to upload these to the enquiry form. Start by telling us whether margin, stock or cash is your main concern. We will discuss an appropriate scope before any work starts.
For broader reporting needs, see management accounts and KPI reporting. For engagement options, see fractional CFO costs.
DTC and wholesale need different margin and cash views
A direct order may settle quickly but incur advertising acquisition costs, payment fees and returns. Wholesale may involve different prices, minimum orders, deductions and collection terms. Compare both on documented net-revenue and cost definitions before deciding which channel is more attractive.
| Channel | Contribution question | Cash question |
|---|---|---|
| DTC | What remains after discounts, returns, product, fulfilment and attributable advertising costs? | When do processors settle and when do advertising or stock payments leave? |
| Marketplace | Are platform fees, fulfilment and returns included consistently? | Do reserves, deductions or settlement cycles delay accessible cash? |
| Wholesale | What margin remains after agreed pricing, logistics and relevant deductions? | Which deposits, credit terms and purchasing commitments must be funded? |
A hypothetical wholesale order with £80,000 revenue and £52,000 relevant product and delivery costs contributes £28,000 before other applicable costs. If the supplier needs payment before the customer settles, that contribution does not finance the gap automatically. Use the actual terms and a downside collection case.
For the management meeting, review the monthly financial reports checklist and use the weekly cash agenda when inventory and settlement timing need closer attention.
Your questions, answered.
Can support cover several sales channels?
Yes. The reporting scope can bring direct sales, marketplaces and wholesale together while keeping their different fees, payment timing and returns visible.
Does a good ROAS mean the business is profitable?
No. ROAS compares attributed revenue with advertising spend. Profit also depends on product costs, returns, fulfilment, payment fees and overheads.
Will you need access to our ecommerce systems immediately?
No system access is needed to enquire. If work proceeds, we can agree which reports, exports or access permissions are necessary for the scope.
Test the cash effect before reordering stock
A profitable product can still absorb cash when the next order must be paid before existing stock sells. Connect supplier deposits, lead times, expected sell-through, returns and customer receipts to the forecast.
Compare the base case with slower sales and higher returns before committing. Separate stock already paid for from supplier balances still due, and show when the next reorder would fall. This makes the funding gap visible alongside product contribution rather than treating accounting profit as available cash.
Questions about this scope
Which ecommerce data should support a cash review?
Start with channel sales and settlements, refunds, stock by product, supplier terms, purchase commitments and advertising spend. Reconcile these to the accounts and cash movements before relying on the forecast.
More questions about this support
Can a fractional CFO help a brand selling DTC and wholesale?
Yes, subject to the agreed scope. Keep channel-specific contribution, stock commitments and payment timing visible, then reconcile the analysis to company accounts and cash.