BTHE BARATELLI INSTITUTE · Mentoring at Scale
FOR DTC OPERATORS

Where the funnel leaks. Where the cash is trapped.

Two questions every DTC operator should know cold but rarely sees on one page. Sessions → product views → cart → checkout → paid. And the working-capital cycle: inventory days + payment-processor lag − vendor terms = how much cash is trapped per dollar of revenue. The math that explains why a profitable Shopify store can run out of money.

5-Step
Funnel breakdown
CCC
Cash conversion cycle
2-3%
Healthy CVR
60-90D
Typical cash cycle
YOUR STORE
1
Traffic + revenue
2
Funnel steps
3
Inventory + AR
4
Vendor terms
5
Funnel + cash scorecard
STAGE 1 OF 5

Traffic + revenue overview

Defaults are typical for a $2.4M revenue mid-size DTC store on Shopify.

Net of refunds. Shopify revenue only — Amazon/wholesale go through their own working-capital cycles.
$
Total website sessions for the year. Pull from Shopify → Analytics → Reports → Online Store Sessions.
$
STAGE 2 OF 5

Funnel step-through rates

Each step where the visitor can drop off. Industry-typical drop-offs are largest at sessions→product (browsing curiosity) and cart→checkout (cart abandonment).

Industry typical: 35-55%. Below 30% means homepage / category-page / ad-creative isn't pulling visitors into products.
%
Industry typical: 7-12%. Heavy lift on this number comes from listing quality (photos, copy, reviews, Q&A, social proof).
%
Industry typical: 45-65%. Drop-off here is often shipping cost shock, account-creation friction, or a slow / clunky cart UX.
%
Industry typical: 60-78%. Drop-off here is often payment-method friction, error states, or unexpected total at the final step.
%
The compound effect. A 10% lift on each of four funnel steps multiplies to 1.46× total conversion (1.1⁴). This is why funnel work compounds dramatically. A store at 1.5% overall CVR with disciplined funnel optimization can reach 2.2-2.5% in 12 months without spending another dollar on ads.
STAGE 3 OF 5

Inventory days + receivables lag

The first half of the cash cycle. Money you've spent on inventory but haven't collected from customers yet.

Total inventory value at cost. Shopify shows units; multiply by your true COGS per unit. Include items in transit if you've already paid the supplier.
$
Cost of goods sold for the year. For a 30%-COGS-of-revenue store at $2.4M revenue, COGS = $720K.
$
Days between sale and money in your bank. Shopify Payments standard: 2-3 business days. Stripe: 2 days. PayPal: 1-3. Custom payouts can extend to weekly. Set higher if you have any holdback / reserve.
% of revenue held by processor as reserve (Shopify Payments may hold 5-15% for high-risk verticals; PayPal 21-day rolling holds for new sellers; Stripe occasional holds). Set 0 if no holdback.
%
STAGE 4 OF 5

Vendor terms (payable days)

The other side of the cash cycle. Vendor payment terms reduce your working-capital need by deferring when YOU pay for inventory.

Days you have to pay your supplier after invoice. New sellers often get cash-on-shipment (0 days). Established brands get Net 30, Net 45, sometimes Net 60. Each 30 days of vendor terms saves ~$X of working capital where $X = one month of COGS.
If you have terms with most vendors, set 80-100%. If you wire prepayments to overseas suppliers but get terms domestically, set 30-60%. Many DTC brands have 0% on Asian-supplier inventory and 60% on domestic prep/packaging.
%
Why vendor terms matter so much. Vendor terms are free working-capital financing. A brand at $720K annual COGS that goes from cash-on-shipment to Net 30 effectively unlocks ~$60K of cash. From Net 30 to Net 60 unlocks another $60K. Most growing DTC brands are systematically under-negotiated on terms — they never ask, and the vendor never offers. Asking is the unlock; most suppliers will offer Net 30 on a $30K+ purchase order without any drama.
STAGE 5 OF 5 · SCORECARD

Funnel + cash scorecard

—
—
—

Conversion funnel

Each step's conversion rate vs. industry typical, with absolute counts.

The cash conversion cycle

Days inventory + days receivables − days payable = days of working capital tied up per cycle.

Health metrics

Recommendations

PAIRS WITH
CFO & Controller's Guide · E-commerce Unit Economics tool
The CFO Guide chapter on consumer brands covers inventory financing options (line of credit, Wayflyer, Clearco, factoring, brand-asset-backed loans), the working-capital math at scale, and the strategic decision of when to take outside capital vs. self-fund growth. Subscribe to the library →
CFO & CONTROLLER'S GUIDE

The full DTC cash management playbook — by email.

Working-capital math at scale, inventory financing comparison, vendor-terms negotiation playbook, the Klaviyo + email + SMS lifecycle that lifts repeat rate, and the path to selling a consumer brand.

We use your email only to send what you requested and occasional Institute updates — never sold, unsubscribe anytime. See our Privacy Policy.

Funnel benchmarks reflect typical DTC consumer-brand industry data (Shopify Plus benchmarks, Klaviyo state of e-commerce, Common Thread Collective unit economics studies). Your peer-specific targets vary by category, AOV, and brand maturity. The cash conversion cycle calculation uses standard finance formulas; in practice your processor lag may vary by payment method mix, refund volatility may add days, and chargebacks introduce additional drag not modeled here. This is not financial advice.
WANT THE METHODOLOGY BEHIND THIS TOOL?
This calculator is one chapter of The Business Buyer's Guide.
The tool gives you the answer. The guide gives you the argument — the case law, the worked examples, the negotiation playbook, the cross-check tables, the exception cases. Read the chapter and you can defend your number to a board, a buyer, an examiner, or a counterparty.
The methodology behind this calculator is in e-commerce buyer track of the reference guide.
See the Guide → Browse all 22 guides
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Educational and informational purposes only. This calculator and any output it produces are intended solely for general educational and decision-support purposes. They do not constitute investment, tax, legal, accounting, appraisal, lending, insurance, or any other professional advice, and they do not create a fiduciary, attorney-client, accountant-client, or advisor-client relationship of any kind.

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