Operating activities refer to the day-to-day activities that generate or use cash for a business, including sales of goods or services, payments to suppliers, employee wages, and other expenses related to the core business functions. In the context of the cash flow statement, operating activities are the primary source of cash flow for most businesses, reflecting how well the company’s operations are performing, and are a top metric taken into account when looking at ecommerce accounting.
For ecommerce businesses, operating activities are the lifeblood of the business. The ability to generate consistent cash flow through sales, while effectively managing costs, is critical to sustaining operations and growth. For example, ecommerce businesses must track cash inflows from online sales and outflows for things like product manufacturing, shipping, and marketing. A solid understanding of operating activities allows business owners to identify areas where they can improve efficiency, reduce costs, and increase profitability- pretty much, being on top of your working capital.
Read our in-depth article about ecommerce operating activities.