Cash flow in ecommerce is the availability of cash in the business at any given time. A positive cash flow means you have the money to pay expenses now, while a negative cash flow means you have to wait for some revenue to come in before you can pay suppliers and so on.
It’s very important to keep an eye on your cash flow – it changes every day and can block your whole operation. For example, you might run out of cash just before a big shipment of stock because you decided to buy new office furniture.
On the other hand, a balanced cash flow allows you to invest in expansion and grow even if you’re not making much profit. Ecommerce businesses can keep cash flow positive with better customer retention, inventory management, increasing AOV.