Can I afford this stock order?

• Normal trading is steady. Monthly money in and out is spread evenly across the weeks.
• Payments land when they are due. The deposit on the day you order, the balance on its week, and freight and duty when the stock arrives.
• The stock sells evenly. Sales start the week after it arrives, plus any payout delay. They are worked out from your margin: what the stock cost to land, divided by one minus your margin, less fees, shipping and ads.
• The cushion is four weeks of outgoings unless you set your own. It is a rule of thumb, not a rule.
• VAT is left out, beyond the freight and duty figure you enter.

A UK brand has £20,000 in the bank and its normal trading breaks even, at £26,000 in and out each month. It orders £15,000 of stock with a 30% deposit, the balance due in week 6 and £1,000 of freight and duty when it lands in week 8. At a 60% margin, with 20% going on fees, shipping and ads, the stock brings in £32,000 over 10 weeks.

The brand never runs out of cash, but it spends weeks 6 to 9 with very little in the bank. The biggest order it could place without dropping below £0 is £19,000.

• Checking the total, not the timing. You may be able to afford the order over the year and still run short in the weeks before it sells.
• Forgetting freight and duty. They land on top of the goods cost, on the week the stock arrives.
• Assuming stock sells the week it lands. Listing, selling and payouts all take time.
• Counting the order twice. Leave this order out of your normal monthly outgoings.
• Planning with no cushion. A slow month or a late shipment then turns a tight week into a cash gap.

Enough to cover demand until your next delivery arrives, but no more than your cash can carry until it sells. Start from your sales rate and your supplier's lead time, then check the cash side here: if your lowest cash point drops below your cushion, order less, split the order or ask for better terms.

Terms decide when the cash leaves. A large deposit takes cash out the day you order, weeks before the stock earns anything. Paying the balance after delivery lets some of the stock sell before you pay for it, which lifts your lowest cash point.

A cash buffer is money you keep aside for slow weeks, late shipments and surprises. A common rule of thumb is a few weeks of outgoings, and this calculator starts at four weeks. The right size depends on how steady your sales are and how quickly you could cut costs.

For your cash, a smaller deposit and a later balance is usually easier, because the money stays in your account for longer. Some suppliers offer a lower price for paying more up front. Weigh that saving against how far it pushes down your lowest cash point.

The money comes back later, so your balance stays low for longer. If your lowest point comes before the stock starts selling, slower sales will not change it, but they will delay getting back to where you started.

Splitting an order into two smaller deliveries spreads the payments out, which usually lifts your lowest cash point. It can cost more in freight or unit price, so check that the cash it saves is worth it.