The cash gap that grows with the business
Between the deposit your supplier wants at order and the day an Ontario customer pays sit weeks of production, an ocean transit, time on your racking and thirty to sixty days of receivable terms. Every dollar of growth stretches that chain further, because more orders means more deposits out today against collections that arrive next quarter. That is why a distributor can post real profit while the operating account runs dry, and it is a working capital problem, not a sales problem.
Our Fractional CFO work makes the gap visible and fundable. A 13-week cash forecast built around purchase orders, vessel ETAs and customer terms shows when the squeeze lands, and a buying plan sized to the cash actually available replaces ordering on instinct.
GMROI tells you which SKUs deserve the money
GMROI, the gross margin a SKU earns per dollar of inventory it ties up, is the one ranking that combines margin and turn. A thin-margin line turning ten times a year can out-earn a fat-margin line turning twice, and only this measure says so. We build it by SKU and product family from your landed-cost books, then use it to set an open-to-buy budget, so reorders chase the lines that pay and the catalogue stops growing by accident.
Dead stock gets the reverse treatment. A pallet that has not moved in months is capital paying storage every month it sits, so slow SKUs get a decision on a schedule: clear, bundle, return to vendor or scrap, and redeploy the cash and the racking into a line that turns. The write-down mechanics live in the books; deciding to act is a CFO habit.
Rebates are earned all year, not discovered in December
Volume rebate programs with larger customers, and the co-op advertising and freight allowances that ride alongside them, are real reductions of revenue that accumulate with every invoice. Accrued monthly as sales build toward each tier, they are a known cost of serving that account; left unbooked, they arrive as a year-end credit note that erases margin you thought you had already earned. We set the accrual by customer and program, and read net revenue after rebates as the true price each account actually pays.
The supplier side deserves the same discipline in reverse. Purchase rebates and early-payment discounts belong in margin when earned, and a volume tier you were close to hitting is a buying decision worth knowing about in October, not in February.
Warehouse or 3PL, decided on cost per order
Your own warehouse is mostly fixed cost: rent, staff, forklifts and insurance that cost the same in a slow month as a strong one. A 3PL converts nearly all of it into variable fees, which lowers risk when volumes swing and adds cost once they steady. The honest comparison is cost per order shipped at your actual order profile, not the headline storage rate.
| Typical 3PL fee line | What actually drives it |
|---|---|
| Receiving and devanning | Per container or per pallet; floor-loaded containers cost more to unload than palletized ones |
| Storage | Per pallet per month, so dead stock pays rent every month it fails to move |
| Pick and pack | Per order plus per line; many small orders cost far more than a few large ones |
| Cartons and freight | Often passed through with a markup worth checking against your own carrier pricing |
| Accessorials | Relabelling, returns and special projects, billed hourly and worth capping in the contract |
We model the switch in both directions, because outgrowing a 3PL into your own lease is as common as the reverse, and the crossover only shows up in a per-order model.
A finance package the bank can margin
Distributor operating lines are usually margined, with the bank advancing against eligible receivables and a portion of inventory, reported monthly, and the peak-season bulge has to be negotiated before the buying season rather than during it. We keep the margining package clean, flag covenant pressure a quarter ahead, and build the case for a larger line through our Business Financing Advisory when growth outruns the current one. Walla Assaf spent years in banking before founding Tauro, so that case gets made in the lender's own language.
Currency exposure is watched in the same monthly rhythm, with open US-dollar commitments summarized beside the forecast; the hedging mechanics themselves live on our importer tax planning page. This is a few structured hours a month for import and distribution businesses across Mississauga and the GTA, quoted in writing after a free 15-minute discovery call.
