Money & metrics · also called float, cash gap, funding gap
Cash-flow float
Cash-flow float is the money an arbitrage business must fund between paying for traffic today and receiving the matching feed revenue weeks later.
An arbitrageur is paid after they pay. Ad platforms bill daily or when a spending threshold is hit. Feeds pay on net payment terms. The cash needed to bridge that gap is the float.
The float grows with success. Doubling daily spend doubles the amount locked in the pipeline, so a profitable campaign can still run a business out of cash. This is why scaling is as much a finance problem as a media-buying one, and why many operators that look profitable on a dashboard fail.
Operators cover the float with their own capital, with a credit line, with invoiced agency accounts that delay the traffic bill, or with faster-paying feed arrangements that cost some margin. Each has a price that belongs in the unit economics. The float is also where risk concentrates: if a feed applies a large clawback or suspends an account, the traffic behind the unpaid revenue has already been paid for. A prudent rule is never to have more in the pipeline with one partner than the business could survive losing.
Think of it like this
It is a builder who buys bricks and pays wages every week but is paid by the client only when the house is finished.
An example
Say daily spend is $2,000 and money returns on average 45 days after it is spent. Float is about 45 x $2,000 = $90,000. At 20% ROI that capital earns $400 a day, but raising spend to $4,000 a day needs another $90,000 first.
Related terms
Net payment terms (Net 30/60)
Net payment terms state how many days after a period ends a payment is due; Net 30 means payment about 30 days after month end.
Working capital
Working capital is the cash a business needs to cover day-to-day costs between paying its suppliers and being paid by its customers.
Credit line (ad spend financing)
A credit line is borrowed money, from a bank, card, lender or the ad platform itself, used to pay for traffic before the feed revenue arrives.
Scaling
Scaling is increasing a profitable campaign's ad spend to earn more total profit, ideally without eroding the return that made it worth growing.
Unit economics
Unit economics is the profit or loss on a single unit of the business, which in search arbitrage means one visitor or one click bought.
Concentration risk
Concentration risk is the danger of depending too heavily on one feed, one traffic source, one keyword group or one account, so a single failure hurts the whole business.