Direct-to-Consumer E-Commerce
E-Commerce Merchant Settlement & Cash Cycle Case Study
Managing payment gateway reserve delays, credit card chargebacks, and peak Q4 working capital swings.
1. Commercial Context
Operating in the Direct-to-Consumer E-Commerce sector requires balancing competitive credit extension terms against ongoing treasury cash flow requirements.
2. The Numbers & Worked Arithmetic
Gross Credit Revenue: $12,500,000
Average Accounts Receivable: $1,450,000
Computed Collection Period (DSO) = ($1,450,000 ÷ $12,500,000) × 365 = 42.34 Days
Average Accounts Receivable: $1,450,000
Computed Collection Period (DSO) = ($1,450,000 ÷ $12,500,000) × 365 = 42.34 Days
3. Strategic Takeaways
By enforcing 14-day automated dunning reminders and offering 1.5% early payment settlement discounts, receivables collection speed improved by 22%, unlocking over $800,000 in liquid working capital.