Import finance

Why importing ties up so much cash

Importing stretches the cash cycle further than almost any other kind of buying. Overseas suppliers often want a deposit when you order and the balance before shipping. Sea freight can take weeks. Customs clearance takes time, and duty and import GST may need paying before goods are released. Only then does stock reach your shelves, and it still needs selling.

For a growing importer, every new order deepens the hole. Import finance fills it.

What can import finance pay for?

Cost	Covered?
Supplier deposit and balance	Usually
International freight and insurance	Often
Customs duty	Sometimes
Import GST	Sometimes
Customs broker fees	Sometimes
Local delivery	Rarely

Ask each funder exactly what’s included. A facility that covers the supplier but not the duty can leave you short at the port.

Planning your landed cost

Before you order, calculate the full landed cost per unit: supplier price, freight, insurance, duty, import GST, broker fees and local delivery. Then compare it with your selling price and the cost of the finance. If the margin survives all of that comfortably, import finance is helping you grow. If it doesn’t, the order may need repricing.

business.gov.au has a solid overview of importing obligations, linked below.

How import facilities work

1. You place an order with your overseas supplier.
2. The funder pays the supplier (often in their currency) at the agreed point.
3. Goods ship; the funder may also pay freight and duty.
4. Goods land, clear customs and arrive.
5. You sell the goods and repay the funder within the term.

Revolving facilities allow you to repeat the cycle for each new order within your limit.

Import finance and its neighbours

• Trade finance is the broader category, covering local suppliers too.
• Purchase order finance suits a confirmed customer order you need to fulfil.
• Inventory finance borrows against stock once it’s landed.
• Export finance is the mirror image for businesses selling overseas.

Seasonal importers may also want a seasonal facility for the quiet months. Not sure which fits? Ask us.

An illustrative example

An online homewares store orders its spring range from a factory overseas. The supplier wants a deposit on order and the balance before shipping. An import facility pays both, plus freight; the store repays as the range sells through its website over the following months. (Illustrative only.)

What else is import finance called?

Lenders, accountants and search engines don’t all use the same words. You’ll also see this entry described as Import loan and Letter of credit funding. In our A–Z index every one of those names points back to this page, so whichever term you searched, you’ve landed on the same thing. If a lender uses a name you don’t recognise, ask them to describe how the security, the term and the repayments work; that tells you far more than the label.

Where does it sit in the directory?

This entry lives on the trade, stock and asset shelf. It’s most often used for stock, trade and invoices, and the security usually involved is invoices, stock or orders. It is one of the quicker entries to put in place when the paperwork is ready. Its closest neighbours are:

• Trade finance — Pay suppliers now and repay once the goods have sold.
• Export finance — Bridge the long wait between shipping overseas and getting paid.
• Purchase order finance — Fund the supplier so you can say yes to an order bigger than your bank balance.
• Inventory finance — Borrow to buy stock, with the stock itself part of the picture.

To compare all of them at once, filter the Loan Finder by purpose and security.

Common mistakes to avoid

• Assuming every invoice qualifies. Funders exclude disputed, overdue, related-party and some progress-claim invoices, so check eligibility early.
• Overlooking concentration limits. If one customer makes up most of your sales, the available funding may be lower than expected.
• Not reading the minimum term. Some facilities have notice periods and minimum fees that matter if your needs change.
• Using it to mask thin margins. Trade and receivables funding works best when each transaction is profitable after finance costs.
• Poor record-keeping. Clean, up-to-date ledgers and stock records make approval smoother and limits higher.

What should I ask before signing up for import finance?

A short list of questions saves a lot of regret. Put these to any lender or specialist before you commit:

1. What percentage is advanced? The advance rate on eligible invoices or stock decides how much cash you actually receive.
2. Which items are excluded? Know the eligibility rules for overdue, disputed and concentrated debts or stock.
3. How are fees charged? Discount charges, service fees and minimums can be structured very differently.
4. Is the facility confidential? Decide whether you’re comfortable with customers knowing a funder is involved.
5. What’s the minimum term and notice period? Exit terms matter if your business changes direction.

If an answer is vague, ask again or ask for it in writing. Good lenders are happy to explain their terms clearly.

Bring in more stock with confidence

If your import orders are growing faster than your cash, import finance could be the shelf to pull from. The enquiry takes about a minute, involves no credit check, and is handled by one specialist rather than circulated around the market.

Please tell us your typical order size, supplier terms and how quickly stock sells. Accurate numbers let us size the facility properly. Start your enquiry.