Lesson 4 of 7 · 9 min read · intermediate
Cash flow and payment terms
You pay for traffic now and get paid for it weeks later. How net terms create a funding gap, how big it gets, and how operators finance it.
Profit and cash are different things, and arbitrage shows the difference more sharply than most businesses. The traffic source wants paying as the clicks happen. The feed pays after the month has closed, been reviewed and waited out its payment terms. In between, the operator funds every click out of pocket. That gap is the cash-flow float, and it is the usual reason a profitable arbitrage business stops.
A builder pays for bricks and wages every week. The client pays when the house is finished. The house may be very profitable, but the builder who runs out of money in month three never gets to hand over the keys. The more houses started at once, the more cash is needed before any of them pays.
When money leaves
Ad platforms collect quickly. Meta's standard arrangement charges the payment method each time spend reaches a billing threshold and again on a monthly bill date, so an account spending heavily is charged many times a week. Native networks commonly work on prepayment or frequent card charges. Some established advertisers obtain monthly invoicing from a platform, which is a form of credit line, but it is granted on the advertiser's record and is not available to a newcomer.
When money arrives
Feed revenue is paid on net payment terms. Net 30 means payment thirty days after the end of the month in which the revenue was earned. Net 60 means sixty. A direct Google AdSense account finalises a month's earnings by about the 3rd of the next month and issues payment between the 21st and the 26th, provided the balance is over the threshold and there is no hold. Publishers who use a feed provider are paid on whatever the provider's contract says, which varies from provider to provider and by the publisher's standing.
A worked example
Say a campaign spends $1,000 a day and earns $1,200 a day, a steady 20% return. Use 30-day months, Net 30 terms with payment arriving at the start of the month after next, and ignore deductions for now. All figures are illustrative.
| Month | Paid to traffic source | Received from feed | Cash position at month end |
|---|---|---|---|
| 1 | $30,000 | $0 | −$30,000 |
| 2 | $30,000 | $0 | −$60,000 |
| 3 | $30,000 | $36,000 (month 1) | −$54,000 |
| 4 | $30,000 | $36,000 (month 2) | −$48,000 |
| 5 | $30,000 | $36,000 (month 3) | −$42,000 |
| 6 | $30,000 | $36,000 (month 4) | −$36,000 |
| 12 | $30,000 | $36,000 (month 10) | $0 |
Read the right-hand column. The business is profitable from the first day, yet it needs $60,000 of working capital before the first payment arrives, and at a constant $1,000 a day it takes until the end of month 12 for the bank balance to return to where it started. The profit is real, but it sits in money the feed owes: at any moment about two months of revenue, $72,000, is outstanding.
Growth makes it worse
Now suppose the campaign is going well and at the start of month 7 the operator doubles spend to $2,000 a day. Revenue doubles too, but the payments arriving in months 7 and 8 are still for the old, smaller months.
| Month | Paid to traffic source | Received from feed | Cash position at month end |
|---|---|---|---|
| 6 | $30,000 | $36,000 | −$36,000 |
| 7 | $60,000 | $36,000 (month 5) | −$60,000 |
| 8 | $60,000 | $36,000 (month 6) | −$84,000 |
| 9 | $60,000 | $72,000 (month 7) | −$72,000 |
How the float is financed
| Source of cash | How it helps | The catch |
|---|---|---|
| Own capital | No interest, no lender | Limits how fast you can grow; all of it is at risk |
| Credit cards | A few weeks’ grace before the statement is due | Limits are small against arbitrage volumes; interest is high if a payment is late |
| Platform invoicing | Pay the traffic source monthly instead of daily | Only offered to advertisers with a spending and payment history |
| Faster feed payment | Some providers pay sooner for established partners | Not guaranteed, and may cost a share of revenue |
| Ad-spend financing or invoice factoring | A lender advances money against expected feed payments | Fees reduce an already thin margin; the debt remains if revenue is clawed back |
Each financing cost must be put into the margin sum. Say a lender charges 2% a month on the amount advanced and each dollar of spend is outstanding for about two months. That is roughly 4% of the spend it funds. If the business runs at 10% after deductions, about two fifths of the profit has gone to finance. Borrowing is also where clawback risk turns dangerous. The loan was taken against estimated revenue. If the feed deducts 10% of a month, the operator still owes the lender in full. If the feed ends the account for policy reasons and withholds the balance, the operator has the debt and no income.
- Forecast cash weekly, not just profit. List what leaves and what arrives in each of the next twelve weeks.
- Know every contract’s terms: payment date, minimum payout, currency, and the conditions under which the feed may withhold or reverse payment.
- Grow in steps you can fund for the whole payment delay, with a reserve left over.
- Avoid depending on one payer. One feed paying late is an inconvenience with two feeds and a crisis with one. This is concentration risk in its most practical form.
Key takeaways
- Traffic is paid for as it is bought; feed revenue arrives weeks after month end, creating a funding gap called the float.
- Peak cash need is roughly daily spend times the days until the first payment: about 60 days of spend on Net 30, about 90 on Net 60.
- A direct AdSense account finalises a month by about the 3rd and pays between the 21st and 26th of the following month.
- Raising spend raises the float immediately, so fast scaling can exhaust cash in a profitable business.
- Borrowing against estimated revenue is risky because clawbacks and account closures reduce income but not the debt.
Questions people ask
How much money do you need to start search arbitrage?
Enough to fund your planned daily ad spend for the whole wait until the first payment, plus testing losses and a reserve. On Net 30 terms that is roughly 60 days of spend; on Net 60, about 90. A plan to spend $100 a day therefore needs around $6,000 to $9,000 of spare capital before tools, content and failed tests. It should be money you can afford to lose.
What does Net 30 mean for publisher payments?
Net 30 means the payer settles thirty days after the end of the period in which revenue was earned, usually a calendar month. Revenue from early in the month therefore waits about sixty days, and revenue from the last day about thirty. Net 60 adds another thirty days. Payment also depends on finalisation, minimum thresholds and the absence of holds.
When does Google AdSense pay publishers?
Google posts finalised earnings for a month by about the 3rd of the following month and issues payment between the 21st and the 26th, if the balance has reached the payment threshold by the 20th and there are no holds. Bank transfer can take several further business days. Publishers on a feed provider's account are paid by the provider on its own terms.
Why do profitable arbitrage businesses run out of cash?
Because costs are paid immediately and revenue arrives one to three months later. Each increase in daily spend must be funded for that whole delay. A business that doubles its budget needs far more cash before the larger payments arrive. Add a late payment, a revenue deduction or a declined card, and a profitable operation can be forced to stop.