Ecom CFO Notebook - Cash Unlocks Insights

Welcome to this issue of Ecom CFO Notebook – a weekly letter for 7–9 figure ecommerce founders and CFOs, sharing my perspective and stories for profitable growth.

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Sam here.

Last week, I shared the Cash Unlock Report that identified where cash gets stuck and why most brands don’t see it until the bank balance starts getting tight.

But the report only told part of the story.

Behind every number is a decision.
A payment term that hasn’t been updated in years.
A SKU that hasn’t sold in months.
Cash sitting idle because no one moved it.

I sat down with David Segal (Highbeam President and founder of DAVIDsTEA)  to talk through what we’re seeing with our clients.

Not theory. Not best practices. Just what’s actually happening inside 7- to 9-figure brands right now.

I will eventually upload the interview to Youtube and post here, but I’m embarrassed about my multi-track video editing skills. Trying to level up my game.

Here’s what stood out.

1. The Most Profitable Brands Are Boring

AI. Content. Paid ads. They matter.

But they’ve become a distraction from the financial levers that actually move cash.

The best operators I know (including David) spend just as much energy optimizing inventory turns, negotiating payment terms, and sweeping idle cash into high-yield accounts.

We saw this play out in our report.

Of the nearly $10M of total cash, only 25% is accumulating interest, leading to ~$7M that could be accumulating interest for these businesses. 

Putting your idle cash to work with interest bearing accounts and automated sweeps is not sexy, but it adds up.

Set it and (mostly) forget it.

2. When More Products = Less Cash

David put it bluntly, “At DAVIDsTEA, we could have done 80% of our revenue with 30 teas instead of 100.”

We saw the same pattern in the data.
One brand didn’t turn inventory once all year.
That’s not strategic depth…that’s capital sitting idle for 12 months. Or worse.

Too many SKUs slow things down. Forecasting gets harder. Inventory builds up. Turns drop.

It’s easy to follow your gut when deciding what to keep in the catalog.
But David shared a good reminder of how that can go wrong.

He discontinued a lavender tea because it wasn’t selling. But when he visited stores, the sales associates said: “Everyone’s asking for the lavender tea! We have to bring it back!”

They did…

Then it didn’t sell. Again.

It’s a classic trap: the loudest voices aren’t always the most representative.
A vocal few can make you think a product is essential, but the data tells a different story.

That’s why SKU reduction isn’t about ego. It’s about facts:

• Where are your turns actually happening?

• What’s sitting stale on the shelf?

• Where are you allocating capital that isn’t working for you?

I’m not saying to gut your catalog tomorrow.
But it’s worth reviewing your products and getting honest about what’s really moving the business.

3. Runway Is Emotional. Turns Are Math.

Founders love runway.

I’m sure you’ve heard a founder say something like “I just feel better when I have $500K in the bank.”

I get it. So do I (my number is around $200k).

But the data shows that hoarding cash doesn’t correlate with better outcomes.

From our research, here’s what healthy runway is:

Once you’re sitting on more than 9–12 months of runway, it’s worth asking:

• Could some of that cash be used to improve payment terms, invest in retention, or clean up ops?

• Is excess runway giving the illusion of margin, when inventory and AR are actually tying up cash?

• Are you over-saving out of fear and under-investing in what’s working?

How Better Terms Can Unlock Cash

If you only take one thing from this, make it this section.

David told me about a founder who said, “I can’t afford a nanny.”
This guy owns 100% of a $40M business. Profitable. Bootstrapped. Sharp operator.

But every dollar was tied up in working capital.

David asked him, “What are your payment terms?” and he replied:

• 30% deposit before production

• 40% when it ships

• 30% net 30 after arrival

So with 90 days of production and 45 days of lag after arrival, he was essentially floating 5 months of inventory before collecting a dime.

They ran the math and fixing those terms freed up $2 million in working capital.

No fundraising. No new loan. Just better vendor negotiation.

David laid out the exact playbook he’s used (and coached clients through) to unlock better terms and millions in free cash.

Here’s the 5-step checklist:

1. Get on a plane. Visit them. Face-to-face matters.

2. Show your history. Bring data: order volume, on-time payments, forecasted demand (we can help you prep)

3. Give them a plan. Don’t just ask for 90 days. Show them what you’re doing and why you’re trustworthy.

4. Make the ask. Tie terms to your shared growth and explain why they win too.

5. Have backups. Be ready to say: “If you can’t offer this, we’re exploring two other partners.”

The most important part of the checklist?
Showing them your plan.

Most brands just ask for better terms and hope for the best.

But suppliers don’t extend terms out of charity. They do it when they trust you and when it makes sense for both sides. This shifts the conversation from a demand to how we can build a partnership.

Next week, we’ll shift back to org structure and finish out the EOS series by walking through how to define your Rocks, the 3-5 priorities that actually move the business.

— Sam

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