"There is profit but no money" is the normal state of a growing seller: all the profit and a bit more is sitting in goods that are in transit, in storage and waiting to be paid out. That is working capital. Here is how to work out how much money should be circulating in your cycle, and how not to choke growth with cash gaps.
The seller's cash cycle
Money travels a full loop:
- Prepayment for the purchase — the money has gone to the supplier.
- Production and transit — for China that is weeks and months.
- Acceptance and the shelf — the goods are in the warehouse and sales have started.
- Sale → payout — the platform transfers on schedule: payout cycles at WB and Ozon.
- Out of the payout comes the next purchase, and the loop repeats.
The length of the loop — from "the money left" to "the money came back" — is your cash cycle. The longer it is and the larger the turnover, the more capital is frozen at any one time.
The requirement formula
A rough estimate:
Working capital ≈ (cost of goods sold per day) × (cash cycle length in days) + a safety buffer.
You sell 20 units a day at a cost of 500 ₽ and the cycle is 60 days → about 600 thousand ₽ is permanently circulating in the system in goods and pending payouts alone, not counting advertising and running costs. Doubling sales demands twice the capital before the profit grows.
How to reduce the capital requirement
- Speed up turnover. Fewer slow SKUs, stock depth driven by sales, work on dead stock: turnover and liquidity.
- Shorten the purchasing cycle. Local top-up purchases instead of "everything from China": comparison of channels; deferred payment from a supplier takes weeks out of the cycle.
- Do not freeze money in "it will sell some day". Excess stock means capital plus storage.
- Watch the money in transit at the platform. Scheduled payouts are predictable receivables; factor them into planning and reconcile them against the charges: hidden deductions. The WB and Ozon schedules differ — comparison of cash cycles.
- External financing — once your own turnover speed has been squeezed dry: loans, factoring and installments for sellers.
A safety buffer in cash
Beyond the stock, keep a cash reserve covering 1–2 cycles of mandatory payments: advertising, taxes, contributions, running costs. The reserve is what separates a nuisance (a delayed payout, a failed delivery) from a cash gap.
Control: three numbers once a week
- Money in the accounts.
- Cost of goods in warehouses and in transit.
- Expected platform payouts and mandatory payments 2–4 weeks ahead.
These three lines are the minimum solvency dashboard; the full management loop is in seller financial accounting.
Related guides: Cost of goods: how to calculate it.
Related guides: A bank for a seller: the business account.
FAQ
"How much working capital does a seller need?" A rough estimate: cost of daily sales × cash cycle length in days + a safety buffer. The main variables are how fast you sell and how long the cycle runs from prepaying the supplier to the platform's payout.
"Why is there profit but no money?" The profit has been reinvested in goods: it lies in the warehouse, travels from the supplier and waits for the platform's payout. That is normal during growth and dangerous when there is no reserve for mandatory payments.
"How do I cut the money frozen in stock?" Speed up turnover (fewer slow SKUs and less excess), shorten the purchasing cycle with local top-ups and deferred payment, and clear out dead stock. Every week of the cycle is money.
"Which is more dangerous — excess stock or out-of-stock?" Both cost money: excess freezes capital and storage, out-of-stock drops the card down the rankings. The balance is held by calculating stock depth from sales speed rather than by eye.
"When should I take external financing?" When the internal ways of speeding up turnover are exhausted and growth is capped by capital. Turnover and the cycle first, borrowed money second: borrowing against an inefficient cycle multiplies the problem.
