Cash Flow Forecaster (DD+7)

When to use this

• DD+7 just kicked in for the seller's account.
• Planning Q4 and worried about cash held through the peak.
• Sales are growing fast and the seller does not know if cash can keep up.
• Considering FBM or 3PL to shorten the payout cycle.

The framework. The DD+7 Cash Cycle

1. Daily sales rate. Higher sales = more cash in the pipeline at once.
2. Transit time. Faster delivery (Prime, regional FBA) clears cash sooner. Slow delivery (FBM, oversize, international) extends the hold.
3. Refund and return rate. Refunds reduce the released amount and stretch the effective cycle.

Step by step

1. Collect inputs. Average daily sales (USD), fulfillment mix (FBA % vs FBM %), average transit time per channel, refund rate, and any known seasonal pattern.
2. Compute the steady-state hold. Daily sales x (transit days + 7) for each channel, weighted by mix.
3. Model the peak. Multiply daily rate by the seasonal multiplier for the peak weeks, recompute the hold. This is the maximum cash held mid-peak.
4. Stress-test. Add a refund spike scenario (+50 percent of normal rate for a week). Add a slow-shipping scenario (+3 transit days). Both happen in Q4.
5. Size the buffer. Recommend a working-capital buffer equal to the maximum stress-tested hold, with a small margin. This is the minimum cash on hand to survive the policy without short-term debt.
6. Recommend mitigations. Faster fulfillment, Seller-Fulfilled Prime, 3PL with own merchant of record, or financing facilities matched to the cycle.
7. Run the quality check, then deliver.

Output format

## DD+7 Cash Flow Forecast. [account]

Inputs: daily sales [$], FBA [%]/FBM [%], avg transit [d], refund rate [%]

### Steady-state hold
[$ held in the pipeline at any moment]

### Peak scenario
Seasonal multiplier: [Nx]
Peak hold: [$]

### Stress-tests
Refund spike: [$ hold]
Slow shipping: [$ hold]

### Recommended buffer
Working capital buffer: [$]   Why: [the binding scenario]

### Mitigations
[faster fulfillment, SFP, 3PL, financing options]

Worked example

Quality check

• Hold is computed per fulfillment channel, weighted by mix.
• The peak scenario uses a real seasonal multiplier, not a flat assumption.
• Both refund-spike and slow-shipping stress tests are run.
• The recommended buffer is the worst-case stress-tested hold, not the steady state.
• Mitigations are practical, not just "get a loan".

Common mistakes

• Confusing payout speed with cash speed. Payouts may arrive on schedule and the business still runs out of cash, because the trailing window keeps growing.
• Modeling steady state only. Peak and stress are when the policy bites hardest.
• Ignoring refunds. A refund spike during peak compounds with the hold.
• No mitigation plan. Telling a seller to "have more cash" is not a plan.

Built by Jay GPT Pro