Business & finance
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.
Search arbitrage has an awkward timing problem. Traffic is paid for now: ad platforms charge a card daily or every few hundred dollars of spend. Feed revenue is paid later, typically on net payment terms of 30 days or more after the month ends. The gap must be funded from the operator's own money. That money is working capital.
The requirement grows with the business. Doubling daily spend doubles the cash locked in the pipeline, which is why scaling a winning campaign can cause a cash crisis even while every day is profitable on paper.
A sensible calculation also includes a buffer for bad surprises: revenue finalised below estimate, a clawback, or a feed paused while spend commitments remain. Operators without a buffer are the ones a single bad month wipes out.
Ways to reduce the need include negotiating faster payment from a feed provider, using a credit line or card terms for ad spend, and growing in steps rather than leaps. Each has a cost or a risk, and none removes the basic need to hold cash.
Think of it like this
A shopkeeper who must pay the wholesaler on delivery but gives customers a month to pay needs enough cash to stock the shelves in between.
An example
Illustrative: spending $2,000 a day with payment arriving about 45 days after the average day's spend means roughly $90,000 is tied up at any time, before any buffer.
Related terms
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.
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.
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.
Clawback (revenue deduction)
A clawback is revenue a feed removes from a publisher's earnings after the fact, usually because clicks were judged invalid and the advertiser was refunded.
Ad spend
Ad spend is the money paid to advertising platforms to buy traffic; in search arbitrage it is the main cost of the business.