In this episode of the “Ecomm Breakthrough Podcast,” host Josh Hadley shares his “essential cash flow playbook” for scaling e-commerce brands without outside capital. He explains how to forecast cash flow, delay payments to suppliers and ad platforms, and strategically use credit cards to extend payment cycles by up to 55 days. Josh details practical tactics, such as rotating credit cards and using services to pay suppliers, to improve cash conversion cycles and avoid debt. He emphasizes the importance of disciplined cash flow management as the foundation for sustainable, rapid business growth.

Links and Mentions:

Tools and Strategies
“Cash Flow Forecasting Spreadsheet”: “00:04:53”
“Credit Card Hack”: “00:15:46”
“Amex Plum Card“: “00:20:12”

Quotes
“Charlie Munger Quote”: “00:13:53”

Websites
“Amazon Advertising Support”: “00:16:38”

Credit Cards and Financial Tools
“Chase Sapphire Reserve for Business“: “00:22:46”
“Amex Gold“: “00:22:46”
“Chase Business Preferred“: “00:22:46”
“Chase Business Premier“: “00:22:46”
“Capital One Spark Cash Plus“: “00:22:46”

Payment Services
“Melio“: “00:24:56”

Timestamps:

00:00:00 Introduction & Episode Overview
Josh introduces the podcast, his background, and previews the main topic: the essential cash flow playbook for e-commerce.

00:00:57 The Hidden Strategy Behind Top E-commerce Brands
Explains why cash flow management is the secret to scaling without outside capital, especially for bootstrapped entrepreneurs.

00:01:54 The E-commerce Cash Flow Challenge
Discusses common struggles with cash flow, inventory, and taxes that e-commerce brands face.

00:03:50 Personal Cash Flow Crisis Story
Josh shares a personal story about nearly missing payroll and the dangers of taking on debt.

00:04:53 The Importance of Cash Flow Forecasting
Introduces the cash flow forecasting spreadsheet as a critical business tool.

00:05:56 How the Cash Flow Spreadsheet Works
Describes how to use the spreadsheet to track inflows, outflows, and anticipate cash shortages.

00:07:09 Forecasting Purchase Orders and Launch Timing
Explains how to use forecasting to time purchase orders and product launches for optimal cash flow.

00:08:08 Spreadsheet Walkthrough: Weekly Cash Tracking
Step-by-step example of tracking weekly cash balances, payments, and Amazon disbursements.

00:11:04 Identifying Cash Shortfalls and Solutions
Shows how the spreadsheet highlights cash shortfalls and introduces strategies to avoid predatory loans.

00:12:57 When (and When Not) to Use Debt
Discusses rare scenarios where loans make sense and why most e-commerce brands should avoid debt.

00:13:53 The Dangers of Leverage Without Financial Sophistication
Warns about the risks of leverage for those without advanced financial modeling skills.

00:14:54 Credit Card Hack: Delaying Payments
Introduces the credit card hack to delay payments to vendors and ad platforms, extending cash flow.

00:16:38 Increasing Amazon Billing Thresholds
Explains how to request higher billing thresholds from Amazon to increase payment float.

00:17:34 Paying Ad Charges with Multiple Credit Cards
Advises on using multiple credit cards with staggered statement dates to maximize payment delays.

00:18:19 Credit Card Application Hack
Shares a tip for applying for multiple credit cards simultaneously to minimize credit score impact.

00:19:08 Optimizing Statement Dates for Maximum Float
Details how to schedule charges for the start of statement periods to get up to 55 days of float.

00:20:12 Amex Plum Card for Extended Float
Describes using the Amex Plum card for up to 90 days of payment float, with trade-offs.

00:21:06 Seasonal Cash Flow Management Example
Shows how to use these strategies during high-spend periods like Q4 to avoid cash crunches.

00:21:57 Rotating Credit Cards & Tracking Rewards
Explains how to rotate credit cards and track perks, rewards, and statement dates for ongoing float.

00:22:46 Recommended Business Credit Cards
Lists the best credit cards for ad spend, rewards, and payment terms.

00:23:54 Paying Suppliers with Credit Cards via Third Parties
Explains using services like Melio or Plastiq to pay suppliers by credit card, even if they prefer wire/ACH.

00:24:56 Offsetting Credit Card Fees with Rewards & Tax Savings
Breaks down how credit card fees are offset by rewards and tax deductions, making the strategy cost-neutral.

00:28:06 Turning Cash Conversion Cycle Negative
Describes how combining supplier terms and credit card float can result in a negative cash conversion cycle.

00:29:06 Cash Conversion Cycle Levers: Positive & Negative
Outlines actions that improve or worsen cash flow, such as inventory turnover and payment terms.

00:31:53 Impact of Credit Card Hack on Cash Flow
Demonstrates how implementing the credit card hack increases cash balances and enables faster scaling.

00:32:55 Action Steps & Forecasting Best Practices
Encourages listeners to implement forecasting, open multiple credit cards, and track statement dates.

00:34:37 Conclusion & Free Resources Offer
Wraps up with a call to action, offering slides and the cash flow spreadsheet via QR code.

Transcript:

Josh Hadley 00:00:00  How would you like to be able to delay payments to your suppliers and even like the big advertising platforms like meta, like Google, like Amazon, even TikTok shop by over 55 days without missing a due date or without having your ads turned off. Welcome to the Econ Breakthrough Podcast. I’m Josh Hadley. I’ve scaled my own e-commerce brand from 0 to 8 figures, and I’m actively building towards nine figures in sales. This podcast is where I document that journey and share the systems, the strategies, and the lessons learned in real time so that you can learn what actually matters and scale your own business. Would you like to know the number one strategy that sits behind some of the best performing e-commerce brands in the entire world? And this is the strategy that actually sits behind the scenes. It’s not outwardly visible, but it allows them to scale infinitely and you never know what’s sitting behind the scenes. Today, I’m going to be revealing what that number one strategy is and how you can implement it into your own business.

Josh Hadley 00:00:57  My name is Josh Hadley. First and foremost, I am a man of faith. I’m a father of four and husband to a beautiful wife. I’ve been in e-commerce business owner for over ten years now, and also an eight figure business owner doing multi millions of revenue on Amazon, Shopify, TikTok shop and also the host of the number one business strategy podcast for ecommerce entrepreneurs, the E-com Breakthrough Podcast. So today, what is this number one strategy that sits behind the scenes? It’s I’m going to show you it’s the essential cash flow playbook. And first you’re going to be like oh Josh, that’s not that’s not hot. That’s not sexy. Like, this is this isn’t like magic. This isn’t the number one strategy. Today I’m going to show you why. It truly is the number one strategy that sits behind the best ecommerce brands that scale infinitely, especially if you don’t want to raise outside capital. Okay. If you want to be a bootstrapped entrepreneur and e-commerce brand owner, this is how you scale quickly and efficiently.

Josh Hadley 00:01:54  So who can relate to this? I played ecom and all I ended up with was nothing in my bank account. I can’t tell you the number of brand owners that I’ve talked to that say even they’ve gotten to eight figures and they’re like, but I have no money in my bank account. Like, all of my money just keeps going to inventory. Inventory taxes, inventory taxes, if that’s you. I can relate because I’ve been there and I’ve seen the impact. E-commerce is a very challenging business model because it requires so much capital. It requires a massive amount of working capital, and oftentimes you need to outlay that capital six months before you can even sell that capital. That’s where the challenge comes from in the e-commerce space. But here’s the good news. What if you could flip that on its head and make one of the most difficult things in e-commerce become one of your best competitive advantages that your competitors can never, ever see? They cannot funnel, hack and say, oh, I see how this guy’s ranking on Amazon.

Josh Hadley 00:02:49  It’s like, no, you’ll never truly understand how I scale my business and why I can continue to go so hard, so fast with product launches. Because I have something secret sitting behind all of this. So how would you like to have more confidence in your cash flow and have more confidence that you will have money in your bank account to fund additional POS, to launch an infinite amount of new products on repeat and without having to take out loans. How would you like to be able to delay payments to your suppliers and even like the big advertising platforms like meta, like Google, like Amazon, even TikTok shop by over 55 days without missing a due date or without having your ads turned off. And how would you like to improve your cash conversion cycle and make it your secret competitive advantage that nobody can funnel hack, and nobody will ever figure out how you’re crushing it in business today? I’m going to be sharing that with you. A lot of these secrets and these tactics that I learned came through the school of hard knocks, so to speak.

Josh Hadley 00:03:50  This was me when I was faced with a decision, when my accounting controller said, hey, Josh, we don’t have enough money in the bank account to fund payroll this week. And I was like, oh, that’s not good. My business is broken and something needs to change. And that’s an uncomfortable feeling. To take money from your own personal bank account, to then go invest it into your business and hope that it pays off. Now, surely this did pay off. There is a happy ending to this story, but most e-commerce entrepreneurs, when that first thing happens and you’re like, oh crap, I don’t have enough money. Whether it be for this P.O. or whether it be for payroll or anything, if you’re running out of that money, maybe taxes as well, and then you have to go take out a loan. You have now entered a very, very slippery slope that I would argue only 10% of businesses truly come back from. Because once you introduce leverage into your business and then you go take out a loan, you’re compounding the problems that exist within your business that drove you to that negative cash point to begin with.

Josh Hadley 00:04:53  I hope you all heard that debt can be good and where used appropriately, it is very wise. But if you are doing this because you don’t have enough pay, you don’t have enough money to make payroll or to order an extra amount of inventory for an existing product. There is something fundamentally wrong with your business. And when you add debt or aka leverage, you make the business worse and you are compounding the problems that sit behind it. I can’t say that enough. I hope you listen to that. Here’s how you solve that. Introducing the magical cash flow forecasting spreadsheet. This is the Bible for me, so to speak, as it relates to business every Monday. This is a document that I go through in immense detail, because this shows me what the future looks like for my business, and allows me to make all the rest of the decisions that I need to make for the day, for the week, as I continue to meet and guide my team. If you don’t have this as your background knowledge walking into the work week, you are going to make some very bad mistakes.

Josh Hadley 00:05:56  And I’m going to tell you why this magical cashflow forecasting spreadsheet is going to basically plot when money is coming into your business and when it is coming out of your business, it’s going to send you warning signals in where you’re going to get to maybe seasonal points in your business, where cash is going to be tight, and you need to begin making strategic decisions now so that you don’t just show up that week and realize, oh, crap, I don’t have money. Oh, let me go scramble and go find, you know, some high term, high yielding debt with high interest on it. You don’t want to be in that situation. So here’s what this cash flow spreadsheet does. It forecasts the cash in my bank account over the next 52 weeks. It includes the timing for all of my credit card payments whenever those statement dates are due. It includes all of my vendor POS, all of my agency invoices, and any payroll expenses. This is going to help you visualize when you’ll be cash negative and how much you’ll need in order to stay afloat, and how long that period of time where you’re maybe lacking sufficient funds, how long that’s going to last? Because maybe if you’re just going to be out for just a week or two, maybe you can employ some of the strategies I’m going to share with you that can fundamentally change the entire course of your business.

Josh Hadley 00:07:09  Here’s the key thing that this is done in our own business. Before I ever place a POA for a new product, I forecast it on this cash flow forecasting sheet because I want to know that, hey, if I just wait one additional week, does that make a significant difference on my cash flow? Or what if I actually get it pushed up and I try to pay for it earlier, or I try to push the production of this POA faster so that there’s a very various events that can occur from here. But this becomes the significant point where you’re either making yourself dive into a deeper hole of negative cash in your business, or you’re smart because, like, you plan this to launch at the appropriate time when you’re cash positive and you’re healthy, and then you could even go harder on your launch process and invest more into your ads, because you’re coming from a more healthy cash position, which then means you’re going to be more bullish when it comes to launching that product to begin with. That’s why this becomes so important.

Josh Hadley 00:08:08  So let’s walk through this magical cash flow forecasting sheet. So those of you listening to this on audio, make sure you come check out the the actual visual version of this on YouTube. Because I am sharing my screen, I have a spreadsheet pulled up in front of me and I’m genuinely showing you like how this looks and how you need to manage it. So if we were to just look at this, the top lines here, you’re going to see like these are the positive levers. These are the positive things that drive increased revenue or cash in the business. And then below this bolded line you’re going to see these are all the things that draw cash out of the business. So let’s first start at the top. What we’re doing here is every week we have it plotted for. So for 52 weeks this is modeled out I’m going to plot what my opening cash balance is for each week. Now this is basically just a formula right. So if you if you start off you can obviously start from wherever you’re at today.

Josh Hadley 00:09:04  Let’s say I have $20,000 in my bank account today. Great. I’m going to put that as my opening cash balance. Oh and by the way, Amazon sends me a disbursement every two weeks this week. I’m getting that disbursement. And it’s going to be for $75,000. Great. That’s going to be positive to my cash flow. So that means as you can see here, I’m going to have $95,000 in my bank account if I don’t make any other expenses in the business. However, as we look down below this bolded line, I can see that actually I have a credit card payment that is due my statement balance from last month is due this week, and it’s $30,000 that I need to pay off. Great. So instead of that $95,000, that means my ending cash in my bank account is going to be $65,000. Then guess what? Week two what’s my starting cash balance? Well, it’s whatever the ending cash balance was from the previous week. So you can see this is just a formula. And then again, as you plot in the money that comes in, the money that goes out, it will update accordingly.

Josh Hadley 00:10:02  So very easy to see. So let’s look and see what happens. Week two I’ve got another credit card payment due. I’ve got agency retainers that I’m paying for. And then I also have payroll and taxes that I have to take into account. So I didn’t get any new distributions from Amazon. Instead I just lost money. I lost cash in my bank account this this week. So now week three comes around, and now I’m starting this week with $27,500 in my bank account. But it’s every two weeks Amazon gives me a healthy deposit hopefully. So this one was again another $75,000. Great. But again, I have a $50,000 credit card payment due that week. Okay, so now I end at $52,000. Okay, great. Well, here’s where the problem comes into week number four. Week number four I have to pay my supplier because the product is ready to be shipped and I’ve got to pay them the remaining deposit. I paid them the original deposit of $30,000 on week one. Now I have to pay them the $70,000 on week four.

Josh Hadley 00:11:04  And I also have to pay payroll again this week, and that’s going to be $80,000 in expenses. But I started the week with just $52,000 in my bank account. That means I’m going to be in the negative by $27,000 and $27,500. Crap. What now? I’m going to show you why this spreadsheet A is going to give you the warning signals. And now I’m going to share with you. Here are the hacks or not even hacks. These are legit strategies that you can move and apply into your business that are going to have a positive impact on the cash that is in your business, so that you don’t have these situations or when they do occur, you have some tools, you have some arrows in your quiver, so to speak, to actually attack this and prevent yourself from having to take out what I call some of those predatory loans where everybody knows you’re in a tight spot. And it’s like all of those people that love to lend to Amazon sellers and say, oh, I’ll advance your payments.

Josh Hadley 00:12:03  I’m just not going to tell you that I’m taking 20% of your capital, right? Like that’s predatory lending at it’s at its finest. And so that’s why you want to avoid this. Because and that’s how you just like, compound the issue over and over again. Well, let’s talk about this. This fundamentally is going to help you understand. Do I need to get a loan. And if you need to get a loan, how long does that loan need to be for. In my previous slide here you can see that, hey I’m only going to be short for one week because next week I get another $75,000 deposit from Amazon. So I’m back in the green at that point. I end that week, week number five, a positive $47,500. Okay, great. So I’m just like I just am missing it by like it’s a matter of days at this point. Again, that’s where you need to ask yourself, is it worth getting a loan? And to be honest with you, I think there are very, very few instances where you should be needing to get a loan.

Josh Hadley 00:12:57  The only time I would ever consider getting a loan is if you get a massive POA from a retailer, and you need to be able to fund that because the retailers are known to not pay you for a long period of time. And do you know why those retailers don’t want to pay you for a long period of time? Because they’re operating out of this cash conversion cycle, and they know they win when they can delay payments to you. And so there are times where I would get a loan, but most of the time, for most people listening to this, unless your business is exploding and you have, I would say over 50% year over year growth rate, you should never be taking out a loan because debt only compounds your problems in your business. Charlie Munger said it best when he said, there are three vices in this world that can really tear you down and really cause you to, like, have to start over from the beginning. Ladies, liquor and leverage. I love that statement because he’s adding in like the two knowns ladies liquor.

Josh Hadley 00:13:53  Okay, great. But leverage y leverage. Because guess what? Leverage can either be very, very positive, but you have to have a very good financial model to know that you’re going to you have a very high likelihood of achieving a strong ROI. But on the contrary, if you’re taking out leverage and you don’t have a mathematical funnel behind it to actually know, oh, this is a very wise decision, I will come out ahead and guess what ultimately happens? You then potentially go bankrupt and then you have to start all over from scratch. It can truly like disrupt everything. So you want to be very, very careful with that. It’s not a no always. It is just in very specific use cases it can be very powerful. Again, I would argue most of the e-commerce sellers that I know, they’re not sophisticated, like financial forecasters, they’re not an analyst. And so they’re not running sophisticated financial models. They’re not looking at the net present value of a new product launch, like, and if you’re listening to this and you’re like, yeah, what’s a net present value? Yeah, exactly.

Josh Hadley 00:14:54  Because before if you were to get like a CFO knows what a net present value is before you ever initiate a new project, whether it’s a new home development or whether it’s a new product launch, you want to bring everything back to a net present value, to know whether that investment is going to be to pay off or not. And then you’re going to weigh the net present value investments across multiple investment opportunities that you have. And obviously you want to choose the higher one. That’s how simple this is. But most people don’t get to that level of sophistication. And so that’s why I would say avoid the debt. Because if you’re not that sophisticated, it’s going to tear you up. So let’s dive into now the actual tactics and strategies that you can employ to flip that cash conversion cycle on its head, where you get to delay payments to your vendors, you get to delay payments to advertising companies. And here’s how you can do it. This is what I call the credit card hack. Step number one.

Josh Hadley 00:15:46  The best thing that you could do is ask Amazon. Even Facebook and Facebook has their own thing now where they’re forcing a lot of bigger spenders to now be billed every 30 days, which, by the way, I actually like that because now I can basically compound this strategy even more effectively because I’m going to get a bill every 30 days, and then I’m going to stack on this, even though they’re going to require like an ACH payment, I’m going to pay them via ACH. Via what? I’ll show you. Still using a credit card. So I still collect my credit card reward points. But now, actually, I’m not even paying for these meta invoices for 90 days. So even though the world may be falling for some people to think that when meta made that change, Google did that a long time ago for big advertisers. and will Amazon follow suit? But probably most likely at some future point in time? I think all advertisers will. But here’s what you want to do, specifically on Amazon.

Josh Hadley 00:16:38  Reach out to Amazon ad support and ask them to increase your billing threshold to $10,000. I’ve never met anybody that’s gotten that over $10,000, no matter how big their business is. But this means instead of Amazon charging your credit card every $500 in ad spend, it’s every $10,000. So guess what? If you only spend $2,000 in ad spend per day? Well, Amazon’s not going to charge you for five days. What have you done? You’ve effectively now moved an additional five days of float into your business. And what if if we go back to our prior example, what if that’s all that made the difference was just those five days. I just needed five days in order to before I’m cash positive. That’s where you can see how powerful this can become. Step number two make sure that you’re paying your Amazon ad charges with a credit card. If you’re not, probably one of the biggest mistakes that you could be making. Like honestly. And again, I’m not saying put it on a credit card and don’t pay off your credit card like quite the contrary.

Josh Hadley 00:17:34  Like you do want to pay off your credit card. Otherwise credit cards like the worst debt that you could be rolling over month to month. Step number three is you’re going to open up multiple credit card accounts. And here’s why. You want to open up cards on different days of the week and different days of the month. Ideally, I want stuff that starts on the first. I want a car that starts on the seventh, I want a card on the 21st, the 28th, etc. and here’s another hack. If you’re like, oh, I only have one credit card. And Josh, tell me I need to get multiple credit cards. Well, sadly, every time you request like a new credit card, like it’s going to pull your credit, which is going to temporarily reduce your credit score, etc. here’s a hack around that. So if you have three different like platforms, let’s say you want to get a Chase card, a Capital One card and an Amex card. Open all three browsers all at one time.

Josh Hadley 00:18:19  And then when you click the apply button, make sure you click them like simultaneously, like within like one second of each other. That way, like the there’s not enough time for it to like pull the report and show up at your credit score at all. But like, if you wait like even like one minute, like it’s too late, like you need to do it simultaneously and then it goes off of just like one credit score that you have in that existing time. So there’s a little secret hack, here’s what you want to do. Now that you have multiple credit cards opened up, you want to document when your credit card statement date begins. Okay. So i.e. maybe it’s the fourth of the month. Okay. The reason why you want to do this. And as you can see on this screen, everybody has, like a credit card statement date, right? It’s like, hey, it opens on the 2nd of February. It closes on the 2nd of March. Okay, great. If that’s the case, I’m going to now plot these on a spreadsheet.

Josh Hadley 00:19:08  And the reason why is because in step five, I only want to process the charges that need to be paid on that credit card only during the first five days of the statement start date period. If you do that, that effectively gives you 55 days until cash leaves your bank account. So what does that look like? My statement start date starts on February 2nd. So I want Amazon to charge my credit card for the $10,000 on March 3rd or sorry, February 3rd. Great. They charged me on February 3rd. My statement doesn’t end until February or March 2nd, so now I’ve effectively got 29 days of additional float. And then, as you know, that statement is not due, that full payback is not due for another 25 days after the statement closes. So now I’ve really extended my time frame from hey, instead of cash leaving my bank account like instead of doing an ACH and Amazon would have taken $10,000 out of my bank account. Now I’m waiting an extra 55 days and this is massive. I hope you can see why this works.

Josh Hadley 00:20:12  Here’s a secret hack if you use the Amex Plum card, it’s going to give you an extra 30 days of float. So what it does is instead of the your statement date being due 25 days after, it actually gives you an extra 60 days after that statement, start date or that statement period. And so effectively this could push it all the way out for 90 days. However, if you do use the Amex Plum card, you are sacrificing some credit card reward points because you don’t earn any there. So just know that that’s what you’re giving up. However, when you’re in a pinch and you’re like, oh, I just need to push this back. Especially for like seasonal time periods. Like, imagine this How many of us, like, have to spend so much in Amazon ads during Q4? It’s like, dang. My my ad budget just over like the Black Friday Cyber Monday weekend is like the entire Ads budget that I spent in October. And it’s like it gets really significant over November and December.

Josh Hadley 00:21:06  How would you like to move that instead of paying that? And theoretically, sometimes if you’re not managing your cash properly, that’s coming out of your bank account before the end of the year in December. But what if that changes the game to where the card is billed on December 1st, but it doesn’t actually leave your bank account until February 28th? Well, the good news is, as you all know, January is when you’re sitting flush with cash because Amazon’s now giving you all the money and all the held back reserved money from all of those sales in December. So now you’re sitting pretty with cash. And you can easily pay and you can invest more heavily into ads knowing that, hey, I’m not actually needing to pay for this point yet. Now, you still need to be smart with your ads, because if you’re just running at everything at like 100% a cost break even, like you’re not going to have the cash that you’re hoping for at the end of the day. So this is what you do with this credit card hack.

Josh Hadley 00:21:57  Step number six. You want to have like your EA, your accounting controller, whoever it is, they they’re going to rotate through your credit cards and really like tell you every day of the week when to start spending on that card. Okay. So again very simple spreadsheet as you can see here how we have it set up. We also know what the perks and the rewards are for each of those cards. We know the statement start date, the due date the week we want to start using, the date we want to start using, how much bonus we’ve used out of the rewards bonus. And all of that is now tracked. And then that way we just keep rotating card after card after card, and we’re just perpetually kicking that can down the road. And it allows us to bring money into the business faster than we’re losing money out of the business. So here’s a list of all those credit cards that we do use in the business. We use the Chase Sapphire Reserve for business. This is a 3% bonus on all ad spend.

Josh Hadley 00:22:46  This is genuinely unreal. All of the other cards that I’ll go through, they all have a cap on the number of like bonus reward points that you earn on ad spend. So take advantage of that Chase Sapphire Reserve for business card. Love it. Amex gold gives you a 4% bonus, but only on the first $150,000 of ad spend. So if you only spend $150,000 in ads in a single year. Not a problem. But if you’re like me and you’re spending that amount truly within a week or so, then you’re going to need multiple cards to push this through. That’s why Chase Sapphire for Business Reserve for business is one of my favorites. Amex plum for the 60 day payment terms after statement day close Chase Business Preferred gives you a 3% bonus on five $150 in ad spend. Chase Business Premier is gives you a flat 2.5% cash back on any spend. That’s over $5,000. That one’s pretty powerful. Capital One Spark Cash Plus gives you 2% on all spend. And then my favorites are the airline credit cards because like, you can earn loyalty status now and basically become a top tier elite whenever you travel just by your ad spend.

Josh Hadley 00:23:54  So we do that with American Airlines, and I get executive Platinum status within the first month, that of the new calendar year, whenever that comes out, because I just put all my ads, been on that card credit card hack here. Part two is now you’ve used that to pay Shopify or sorry, TikTok shop pay Amazon for the ads. Pay Google for the ads. That’s great. You’ve now kicked the can down the road. Now guess what you could do with your suppliers? Move your supplier payments back as well without having to adjust anything. You can pay your suppliers with a credit card, even though they’re going to want a wire transfer or an ACH. So here’s how that works. You use milia or plastique to pay these suppliers overseas. Yes, you’re going to incur a 2.9% credit card fee for doing that, but I’m going to show you how that all washes out once you calculate your cash back and your taxes and how you actually come out ahead. And it obviously allows you to kick the can down the road with actually when the money leaves your, your bank account.

Josh Hadley 00:24:56  So here’s how this works. Let’s say you have a 20 zero zero $0 payment that you need to make to a supplier. You’re going to be charged a 2.9% fee on that capital. If you use a credit card to pay this, okay, well, that’s going to be $580. And you’re like, gosh, that’s stupid. Like you’re being charged interest like this isn’t it’s basically like you’re taking out a loan on the business, and this is going to be kind of expensive because this is only giving you 60 days of flow. So your effective like interest rate is actually really high. No. I’m going to show you why all of this. Like it basically is a wash if I use my Chase preferred card, gives me 2.5% cash back on any invoice or any spend that’s greater than $5,000. So I’m going to get 2.5% back. Here’s the other thing that’s going to happen. That $500, $580 fee that I’m going to pay is going to show up as an expense line item on my profit and loss statement, which then is going to offset my income.

Josh Hadley 00:25:54  Right? It’s going to lower my net profit for the business. But where did that money actually go? So ultimately it’s it’s reducing my tax burden. So if I’m taxed at 30%, right, $580 at 30% is $174. So when I calculate the cash back at 2.5% back, that’s $500. And then I stack on top of that. The tax write off that I’m getting is $174. You can see my total benefit is $706. So truly like the actual cost to the business is zero because taxes were going to eat that up anyways, at least $174 of it. And what I’ve done because credit card reward points or cash back is not taxed. I’m basically now funneling my money in a very ethical way. I am ethically funneling money at least 2.5% of all the suppliers that I pay in a given year. And let’s say you’re you’re paying $100,000. Right. In a given year, for a manufacturer that’s $2,500 that year, that basically goes to you tax free, that just gets shifted to your personal income without you having to pay taxes on it.

Josh Hadley 00:27:03  Now times that by ten, right? Times that by ten. When you’re doing $1 million now that’s $25,000. That’s like just tax free income to you. That again you’re just arbitrage this. So again don’t be scared of that 2.9% fee. That’s my favorite thing. So let’s talk about what this credit card hack does. So imagine we have 30% upfront payment terms with our manufacturer and then 70% are due at shipping. So this is the way it looks I buy inventory and then I have to pay for my inventory. And then I get to sell the inventory only after I’ve fully paid for it. But then I don’t collect cash for much later on. So again, hopefully you’re visually walking through that in your mind. But imagine if you have favorable payment terms with your supplier. Imagine if you had net 120 days and your supplier says, hey, you don’t need to pay me until 120 days after the product ships. Then you layer on top of that 55 days of additional float on your credit cards. Guess what your cash conversion cycle looks like.

Josh Hadley 00:28:06  It turns into a negative cash conversion cycle. Here’s what happens I buy the inventory, but cash hasn’t yet left my bank account. I get to sell that inventory before cash has left my bank account. I get to collect the cash on all of the sold inventory and then. Oh yeah, by the way, after I’ve collected all that cash, then I’ll pay for that inventory. Do you see how that literally changes the game of e-commerce? And it flips it all on its head? This is how the best e-commerce brands scale fast, and they scale infinitely because cash is not a constraint in their business. In fact, they make money before they even spend the money to make that money. That’s how you can launch an infinite number of products without needing to take on debt or grow slowly over time. Because like you, you, you know, take a few percentage points here and there, shelter it away. Right. This is the secret that sits behind the most successful e-commerce brands. So let’s talk about cash conversion cycle levers.

Josh Hadley 00:29:06  Like what are the positive levers that you can do in your business to increase the cash in your business? And then what are the negative levers that actually consume cash or take it away more quickly? So let’s talk about the positive levers first. If you need less time needed to sell your inventory, this is a positive lever. So that means if you can have smaller purchase orders and you can sell out in 3 to 6 months, like that is positive. And I know sometimes people are like, oh, well, I’m going to buy the 10,000 unit Poh. Because like, I like the unit economics better there. That might be true. However, when you’re first starting out, I want to see if I could only do a 2500 unit order. What if that 10,000 unit order lasts me 9 to 12 months? But if I do a 2500 unit order, it will only last me maybe like three months. So if that’s the case, then I’m going to just need to be ordering more frequently, which is actually an advantage.

Josh Hadley 00:29:59  You do not want to saddle yourself with a bunch of inventory and turn your cash into effectively trash. Sometimes that ultimately won’t be sold. So again, lowering the mocks and sometimes being willing to pay a premium even if it’s like an extra $0.10 per unit to purchase that product, but at a lower MOC and you sell through it faster, increase your inventory turnover ratio. That’s a positive lever to your business. If available, request daily disbursements from Amazon Seller Central. And if you’re on Shopify, it means move your payout from guess what the standard is like 14 or 30 days. So on Shopify it’s like, no, you will pay me out every single day after I make sales. TikTok will give you money every seven days. And again, no matter what platform you’re on, if you can just try to request earlier disbursements, that’s where the magic sits and then payments to your suppliers if you can push those out. Right. Extend your payment terms with them even without adding the credit card hack on it.

Josh Hadley 00:30:55  That’s a positive lever to your cash flow. Obviously, the reverse is true for all of those situations, so a negative lever would be having to take more time to sell your products, right. Ordering so much inventory that it takes you an entire year, and you’ve basically locked up all of your cash in inventory for one year. That’s terrible. Heaven forbid you have more than one year of inventory, less efficient cash collection of sales. So if you’re waiting two plus weeks or a month for any of those payment platforms to give you your money, like that’s damaging, and then payments to your supplier leaving your bank account earlier. So again, worst payment terms would be 50 up front, 52 at shipping or 90 upfront. Tend to it shipping like the more that goes earlier in the process, the worse it is for your cash. So as you can see here, we’re going to come back to that magical cash flow forecasting spreadsheet now. And let’s just imagine we only implement only implement the cash the credit card hack that I just showed you.

Josh Hadley 00:31:53  We’re not even negotiating payment terms with our supplier. But instead of paying them with a wire transfer out of my bank account, I’m charging it to the credit card. And ultimately, this is now going to fall on my credit card, what, 55 days later? Look at what happens to my cash in my bank account. It actually grows. And when I actually have to make that $70,000 payment for that inventory now, I now am ending that week’s bank account balance with $87,000. And that makes all the difference. That is how brands scale quickly. And so my action item for you is, number one, implement this cash flow forecasting spreadsheet in your own business. If you have an accounting controller or any accounting team members, have them do this. If you have an executive assistant, this is a task they could do as well. You’re just going to need to pull the statements every week and get the amounts that are due and how much cash is coming in, and basically forecast it. Now you may be asking like, hey, how do I forecast how much money I’m going to get in December from Amazon? And it’s January right now.

Josh Hadley 00:32:55  Well, what you should be doing is look at the last 52 weeks that you were in business. Hopefully you’ve been in business for more than 52 weeks. Look at where you were at the same time last year, that final week of December last year. Amazon gave you a $100,000 payment. Well, are you growing this year or are you down if your growth rate is hey, I’m up 10% this year. Great. Well then forecast. Hey, I think that we got $100,000 this last week. In December last year we’re up 10%. So conservative side, let’s say it’s $110,000. Okay great. But if you’re losing market share and your sales are declining, then maybe you want to forecast, hey, we’re actually down 10%. So I’m going to forecast only 90% is coming in the last week of December this year. So again it’s not a perfect science. But guess what this does. It gets you in the ballpark, and it’s going to flash some warning signals before you show up and you’re like, oh crap.

Josh Hadley 00:33:45  Now I’m in really deep trouble. So again, you could get really, really specific. And again, like, this could be somebody’s entire full time job. If you have like a CFO. This is the type of work that they would be doing and they could really like they could model out different scenarios where, all right, what’s the bullish scenario where we’re growing at 25%? What do my deposits look like. Then hey what does it look like if we just like maintain the same thing from last year. What does it look like if we’re we’re in decline mode and we’re down 10% year over year, like a toggle of a button and it switches things for you, like that’s what the CFO level work could provide for you. Remember systems and focus scale while distraction kills. So go and implement the cash flow forecasting spreadsheet. Go and open up multiple credit cards. Start tracking on your spreadsheet when those credit card statement dates are, and then begin executing a process so that you only charge those credit cards during the first five days of the statement.

Josh Hadley 00:34:37  Start date for those credit cards, and then enjoy watching your cash build in your bank account. At least get some decent interest at least like 3 or 4% interest. If you have a high yield savings account that you can move that money into, even if it’s just for a month. Guess what? That begins to compound your money instead of letting other people use your money. Use your own money to go make more money. So if you got some value from this podcast, if you would be so kind as to number one, leave me a review on your favorite podcast platform of choice. Number two. Share this episode with an operator who needs to hear it. And last but not least, drop this into slack. A discord, a WhatsApp community that you’re a part of with other operators and business owners that need to hear the same thing. But wait, I’ve got some more for you. If you’ve done that, and if you’ve been willing to leave me a review and you’ve been willing to go share this.

Josh Hadley 00:35:26  Okay, what I’m going to share with you right now is here is a QR code for you to go get number one. These slides, but also a copy of this cash flow forecasting spreadsheet so that you can go implement this in your own business.