Blog · Finance metrics and formulas
Compare the cash tied up in ecommerce stock, unsettled sales and payout reserves by channel. Reconcile inventory and settlement exports, then test supplier and payout timing.
Ecommerce working capital funds stock and sales proceeds that have not yet reached the bank, less the supplier credit supporting them. Compare those balances by channel, then put replenishment payments and expected payouts on dates to see where cash becomes tight.
For an operational channel comparison, use:
Channel working capital = Owned inventory + Net unsettled sales + Recoverable payout reserves - Related trade payables
This is a defined trade measure, rather than the full current-assets-minus-current-liabilities calculation in the working-capital guide. Track bank cash, debt, taxes and customer obligations separately. Add other operating balances when they are material and show the additions explicitly.
An order, recognized revenue and a bank receipt can fall on different dates. The SEC's financial-statement guide distinguishes an income statement's results from a cash flow statement's exchanges of cash. A profitable sales channel can still need funding while stock and payouts remain unavailable.
Use the inventory valuation export, supplier open-items report, sales settlement file and reserve statement at the same cutoff. Retain channel, SKU or settlement reference, currency, balance date and expected cash date.
Inventory should include owned goods wherever they sit, including a fulfillment location or goods in transit when ownership has passed. Use carrying value, rather than the store's listed price. The IRS's inventory-cost guidance describes purchased merchandise cost as invoice price after discounts plus transportation and other acquisition charges; use your finance team's applicable carrying-value policy consistently.
Assign inventory and payables to channels only when the source records support the split. Keep shared stock in its own row if it serves several channels. Arbitrarily allocating all shared stock to the fastest-growing channel can make its funding needs look worse without changing company cash.
A fictional US home-goods retailer has two channels. Its settlement export separates gross unsettled sales from deductions and reserve transfers. Each reserve remains recoverable and has not been included in the net current settlement amount.
| Channel | Gross unsettled sales (USD) | Fees (USD) | Refunds (USD) | Transferred to reserve (USD) | Net current settlement (USD) |
|---|---|---|---|---|---|
| Own website | 28,000 | 2,000 | 2,000 | 6,000 | 18,000 |
| Marketplace | 62,000 | 5,000 | 6,000 | 9,000 | 42,000 |
| Total | 90,000 | 7,000 | 8,000 | 15,000 | 60,000 |
With columns A:F matching the table, enter in F2 and fill down:
=B2-C2-D2-E2
The check is $90,000 - $7,000 - $8,000 - $15,000 = $60,000. Reconcile that amount to settlement receivables, and reconcile the separate $15,000 reserve to the reserve statement. Do not subtract the reserve transfer again when computing channel working capital: the transfer moved a receivable between two buckets.
This simplified file has no additional settlement adjustments or opening reserve balances. Real exports may include chargebacks, prior-period corrections and reserve releases; show each as a separate movement and reconcile opening plus movements to closing.
The same cutoff produces these owned inventory and supplier balances:
| Channel | Inventory (USD) | Net unsettled sales (USD) | Recoverable reserve (USD) | Supplier payables (USD) | Channel working capital (USD) |
|---|---|---|---|---|---|
| Own website | 120,000 | 18,000 | 6,000 | 45,000 | 99,000 |
| Marketplace | 80,000 | 42,000 | 9,000 | 35,000 | 96,000 |
| Total | 200,000 | 60,000 | 15,000 | 80,000 | 195,000 |
Put this table on a separate sheet in columns A:F. In F2, enter and fill down:
=B2+C2+D2-E2
The total is =SUM(F2:F3). Check it independently with =SUM(B2:B3)+SUM(C2:C3)+SUM(D2:D3)-SUM(E2:E3). Both must return $195,000. Dollar results are shown as whole dollars; no rounding is needed in this example.
The marketplace uses less stock but ties up more in settlement balances. That identifies the next investigation: examine its settlement and reserve dates before placing another replenishment order. The balance alone does not establish which channel earns the better return.
Assume the own-website channel generates $90,000 of eligible net settlements over a 30-day period, evenly spread. Held reserves remain unchanged. Its $18,000 current settlement balance corresponds to six days of eligible proceeds:
| Payout assumption | Calculation | Unsettled amount (USD) |
|---|---|---|
| Six-day delay | 90,000 / 30 × 6 | 18,000 |
| Ten-day delay | 90,000 / 30 × 10 | 30,000 |
| Additional funding | 30,000 - 18,000 | 12,000 |
The sensitivity formula is:
=90000/30*(10-6)
All other balances held fixed, total channel working capital increases to $207,000: $195,000 + $12,000. This flat-volume estimate explains the exposure; the actual cash calendar needs the dated settlement batches and reserve release assumptions.
Place each supplier invoice on its due date alongside expected bank receipts. Add open-order deposits and replenishment payments separately, without adding inventory purchases twice. Use initial working capital for a new channel's opening stock and working-capital days for an ongoing timing comparison. Once balances are reliable, working-capital turnover relates the investment to sales.
Upload inventory, settlement and supplier files: Covirage maps the columns, and its tools compute and check the channel balances and settlement reconciliations. The external AI model explains the results with every figure traced to its rows. Create a free Covirage account and bring a sample of your own data; creating the account takes about a minute.
See spreadsheet analysis with Covirage for the supporting context.
Amounts owed to the business from completed sales can be operating receivables while they await settlement. Use the recoverable amount after fees and refunds, keep held reserves separate, and reconcile the total to the ledger's treatment of those balances.
An order commitment is not automatically owned inventory. Use the accounting ownership cutoff for the inventory balance and show future deposits and supplier payments on a separate dated cash schedule. Otherwise, the same purchase can be counted as both stock and a future commitment.
No. Growth can require purchasing stock before the related sales proceeds reach the bank. Whether funding needs rise depends on inventory purchases, supplier credit, settlement delays, fees and returns, rather than order revenue alone.
Use the carrying value from the inventory records, with a consistent cost basis and any recorded write-downs. Selling price includes margin that has not yet been earned. Allocate shared stock consistently, or leave it in a separate shared-inventory row.