You open your store's dashboard to find new orders and sales moving. Then, you review your account to pay a supplier or fund an ad campaign, only to be surprised that the available balance is less than what you need. How does that happen when the store is generating sales?

The answer becomes clear when you trace the journey of the money: When did it come in? Where did it go? How much of it is tied up as stock on the shelves? And what payables are awaiting settlement? You might have inventory you expect to sell at a profit, but that doesn't help you pay a bill that is due today.

In a Salla interview with Mohammed Al-Omari, a specialist in business development and financial performance analysis, a question frequently asked by merchants was raised: "I'm selling, but I have no money." Starting from this observation, we can understand the relationship between sales, inventory, and cash flow, and how to evaluate your decisions before your operational room to manoeuvre narrows.

Watch Mohammed Al-Omari explain the relationship between expenses, inventory, and liquidity, starting from minute 29:42.

The Big Picture | Sales, Profit, and Liquidity Answer Different Questions

Sales tell you the total value of what you sold, profit indicates what your revenue generates after accounting for costs and expenses, and liquidity relates to the cash available to meet your obligations as they fall due. Sales can improve without the balance in your account increasing at the same pace.

Suppose you purchased stock, then sold part of it. The sales proceeds that reach your account will need to cover other payments, while a portion of what you paid to the supplier remains tied up in unsold goods. If you reinvest all the sales proceeds into purchasing new inventory, you may continue generating sales and expanding your catalogue, but find it challenging to pay for day-to-day operational expenses.

Therefore, you need to look at sales and profitability alongside the timing of cash inflows and outflows. Every figure reflects an aspect of your store's health, and the full picture emerges when you read them together.

Inventory | Where Did the Cash in Your Account Go?

One of the key concepts Al-Omari highlighted in the interview is that purchasing inventory converts available cash into stock that needs to be sold before its value returns to the business. Inventory has value, but it takes time to convert back into cash that you can deploy again.

Let us trace a simple example: You have SAR 20,000 available, and you decide to buy stock for SAR 16,000. You now have new inventory, with SAR 4,000 left in the account. If the payments due before the next receivables arrive total SAR 6,000, you will be short by SAR 2,000 to settle them on time.

You had SAR 20,000 → Purchased stock for SAR 16,000 → Remaining balance SAR 4,000, while upcoming obligations are SAR 6,000

The stock might eventually sell at your projected price, but the nearest commitment falls due earlier. The issue here lies in the timing of cash availability, even if the purchasing decision seemed promising in terms of margin.

Before increasing a supplier purchase order, ask yourself: What balance will remain after paying it? And what payments must be covered before I can realistically expect to recover that money from sales?

Timing | When Does Cash Arrive, and When Must You Pay?

Recording expected amounts and their dates helps you make clearer decisions. You may know that incoming cash collections are on the way, but their ability to cover a specific liability depends on arriving before the payment due date.

Suppose you have SAR 4,000 in your account today, expect receivables of SAR 5,000 next week, and owe a supplier SAR 6,000 tomorrow. Your total current and expected funds amount to SAR 9,000, but that cannot cover tomorrow's immediate requirement alone.

Hence, when reviewing liquidity, write the date next to every amount: expected collection dates, supplier payment deadlines, subscription renewals, and any other operating payments. Base your forecasts on actual settlement schedules and payment terms, while separating confirmed receivables from prospective sales.

This review reveals the gap early, allowing you to adjust a purchase or spending decision before committing to it.

Expenses | What Is Awaiting Your Sales Proceeds?

When sales proceeds enter the account, the balance might look ready to be spent. In reality, a portion is already earmarked for pending obligations, such as supplier dues, salaries, shipping, or subscriptions.

Managing the situation becomes even more challenging when business payments are mixed with personal drawings, or when recurring subscriptions and services you no longer use continue to be charged. At that point, you might know your sales figures, but struggle to explain where the money went and how it impacts operations.

Start recording outgoings as they happen, classifying them in an easy-to-review manner: inventory purchases, order fulfilment, marketing, operating expenses, and personal drawings. The goal is to answer a clear question: Where did the funds go over the past period, and what recurring expenses will leave the account next?

When looking for room to ease cash pressure, review the actual utility of each expense. The right decision might be cancelling an unused subscription, rescheduling a purchase, or adjusting ad spend. Conversely, protect what directly impacts service quality and customer experience.

Adapted from his discussion in the Salla interview.

Purchasing | Is the Supplier's Discount Worth Tying Up This Cash?

A supplier might offer a lower unit price in exchange for a larger volume, making the deal appear attractive as unit cost drops. However, evaluating it also requires knowing how fast that extra volume can be sold, and how much cash remains to run the store after the purchase.

If the surplus stock stays on shelves for an extended period, you might need that cash in the interim for marketing, order fulfilment, or meeting liabilities. Factor in the purchase savings alongside inventory holding duration, storage costs if any, and the potential need to mark down prices later.

If you consider running a promotion to clear this inventory faster, also calculate what margin remains after the discount, and how many units you must sell to meet your target. Also read: How to Calculate the Impact of Discounts on Your Profit Margin

Before accepting a supplier's bulk offer, review past sales data for the product, current stock levels, and standard lead times. Then, estimate an order size that meets your demand while leaving adequate cushion for upcoming obligations.

The same logic applies when expanding your catalogue. Adding new products requires capital and may also demand photography, marketing, and time before demand becomes clear. You can start with a test quantity to gauge interest, then use the results to project your next purchase.

The Review | Turn Your Projections into a Simple Table

You can begin with a weekly forecast covering the next four weeks, then expand the horizon according to your store's sales and replenishment cycle. Enter the opening available balance, add the receivables expected during the week, then subtract the payments due.

Projected Closing Balance = Opening Balance + Expected Inflows − Expected Outflows

Put simply: If you start the week with SAR 5,000, receive SAR 8,000, and pay out SAR 9,000, you will end the week with SAR 4,000 in your account.

This calculation tracks cash movement, not net profit. To apply it effectively, assign a date and a confidence level to each amount, then update the table with actual figures.

Focus your review on five questions:

What is available right now? Record the cash you can deploy, keeping earmarked liabilities in mind.

What is coming in, and when? Separate confirmed collections from projected future sales.

What must be paid? Compile supplier, operational, marketing, and other dues, sorted by due date.

Where does the deficit appear? Identify the week where available funds might not cover required payments, and review what can be adjusted in advance.

What varied from your previous forecast? Compare actual amounts and dates against your plan, so subsequent forecasts reflect the store's operational reality more closely.

To understand the relationship between store costs, break-even point, and cash flow, learn e-commerce financial fundamentals with Mohammed Al-Omari on Salla Academy.

Getting Started | Review Your Next Inventory Order

Select your next stock purchase decision, and note down its value, the remaining account balance afterwards, and the payables due before subsequent collections arrive. Then check whether covering these payables relies on confirmed cash or on anticipated sales.

If a gap emerges, review the order volume and timing, available payment terms, and expenses that can be deferred without disrupting operations. This step gives you a clearer foundation for decision-making and helps you detect liquidity pinches before they occur.

The stock you plan to buy might be a solid commercial opportunity, but capitalising on it requires having both the funds and the runway needed to sell it. By monitoring sales alongside account inflows and outflows, planning for growth aligns much more closely with your store's true capacity.

Watch the Interview | Deepen Your Understanding of How Discounts Impact Margins

In this Salla session, Mohammed Al-Omari discussed the relationship between pricing, costs, discounts, advertising, and liquidity, answering merchants' questions regarding their financial decisions. The discussion on the impact of discounts on margins begins at minute 19:31 of the recording.

Planning to launch your e-commerce business? Create your store on Salla, and start setting up your products and planning your costs right from the outset.