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Here's what our capital requirements look like (we manufacture in Asia and sell on Amazon): 35 days in transit from Asia to U.S. West Coast + 60 days of safety
by toasterlovin 6y ago
Here's what our capital requirements look like (we manufacture in Asia and sell on Amazon): 35 days in transit from Asia to U.S. West Coast + 60 days of safety stock + average of 14 days from when we sell to customer to when Amazon disburses funds. But the factory extends 60 day payment terms, so we need to cover 35 days of cost of goods sold (@ 50% of revenue) + 14 days of revenue. Or ~31 days of sales. I would say that we are probably in the typical range for a company that sources from Asia. If you source domestically, then you probably only need 30-45 days of safety stock, depending on lead times, but you might not get 60 day terms from your supplier.
- LatteLazy 6y agoThanks!