The Challenge
A mission-driven eCommerce company selling faith-based products had grown to $12M in revenue, but was running out of cash every quarter. Despite strong top-line growth, the founder could not explain why profitability kept slipping. Inventory was ballooning, payment terms with suppliers were mismatched with customer collection cycles, and there was no visibility into which product categories were actually making money.
“Revenue was up 40% year over year, but I was stressed about making payroll every other month.”
What We Did
Cash Flow Diagnostic
We performed a full cash flow diagnostic in the first two weeks. The findings were clear: the company had a working capital problem, not a revenue problem. Cash conversion cycle was 87 days, meaning every dollar of revenue took nearly 3 months to become usable cash.
Working Capital Optimization
- Inventory turns: Identified $1.2M in slow-moving inventory tying up cash. Implemented ABC analysis and reduced safety stock levels on C-category items by 40%
- Supplier terms: Renegotiated payment terms from Net 15 to Net 45 with three largest suppliers, freeing up $380K in working capital
- Collections: Implemented automated payment reminders and early-pay discounts for wholesale accounts, reducing average DSO from 52 to 31 days
Profitability Analysis
We built a contribution margin model by product category and sales channel. The results were eye-opening: the company’s fastest-growing product line had a 12% contribution margin after fulfillment costs, while a slower-growing legacy line had 58% margins. Growth was actually diluting overall profitability.
13-Week Cash Flow Model
We implemented a rolling 13-week cash flow forecast that the founder reviewed every Monday morning. No more surprises. No more payroll stress.
The Results
“I went from checking my bank account every morning in a panic to actually planning three quarters ahead. DMW showed me that growing smarter matters more than just growing faster.” , Founder
Key Takeaway: Revenue growth without cash flow management is a treadmill. The companies that scale sustainably are the ones that understand their cash conversion cycle, optimize working capital, and make pricing decisions based on contribution margin, not just top-line revenue.
Struggling with cash flow despite strong revenue?