Trade finance · Cash flow finance
Trade finance for Cash flow finance
Cash flow finance is short-term business funding that covers the gap between paying costs and receiving revenue, used for wages, suppliers and tax rather than for buying assets.
How trade finance works for Cash flow finance
Importers face the longest cash-flow gap of all: pay the overseas supplier at shipment, wait six weeks for arrival, then sell on terms. Trade finance settles the supplier and gives you 90 to 150 days, effectively covering the entire cycle. It fixes the gap at its source rather than borrowing to paper over it. Facilities are revolving and sized on import volumes. Currency movement across a long cycle is a genuine risk worth discussing alongside the facility itself.
The cash-flow pattern we plan around
Costs falling due weekly or fortnightly against revenue arriving on 30–60 day terms, with the gap widening as the business grows.
What cash flow finance typically fund
- Wages and superannuation between invoice payments
- Supplier and trade accounts falling due
- BAS, PAYG and quarterly tax obligations
- Bridging a seasonal trough
Trade finance for Cash flow finance: the numbers
| Typical amounts | $50,000 – $5,000,000 |
|---|---|
| Term | 2–6 months |
| Indicative rates | 9% – 20% p.a. |
| Repayments | Each drawdown repaid in full at the end of its term |
| Speed | 1–3 weeks to establish, then 24–48 hours per drawdown |
| Documents cash flow finance usually need | ABN, GST registration and 6–12 months of bank statements · Aged receivables and payables reports · Most recent BAS lodgements |
Rates are indicative, change without notice and depend on the lender, product, asset, term and your credit profile at the time of application. They are not an offer of finance. Comparison rates, where shown, are true only for the example given.
Key terms
Cash flow finance
Cash flow finance is short-term lending used to cover operating costs during the gap between outgoings and incoming revenue, typically repaid within twelve months and not used to purchase assets.
Structural versus one-off gap
A structural gap recurs every trading cycle because of payment terms, and suits a revolving facility; a one-off gap arises from a single event and suits a term loan with a defined end date.
What is trade finance?
Trade finance is short-term funding that pays a supplier for goods at the point of order or shipment, with the borrower repaying the financier once the goods are sold. It is typically a revolving limit with drawdown periods of 60 to 180 days.
What is a letter of credit?
A letter of credit is a bank undertaking to pay an overseas supplier once specified shipping documents are presented. It gives the supplier payment certainty and gives the buyer assurance that payment only happens when the shipment is properly documented.
Trade finance vs invoice finance
Trade finance funds stock before you sell it; invoice finance funds the receivable after you have invoiced. Importers frequently run both, so the facility covers the full cycle from purchase order to customer payment.
Questions from cash flow finance
What is the cheapest way to cover a cash flow gap?
A line of credit or overdraft you draw only when needed is usually the cheapest for recurring gaps, because interest is charged only on the balance used. Invoice finance is cheapest for businesses with commercial debtors on long terms. Short-term unsecured loans and merchant cash advances are fastest but cost more, so they suit one-off needs with a clear return.
How quickly can cash flow finance be approved?
Unsecured loans and merchant cash advances are often approved the same day and funded within 24 to 48 hours from bank statements. Lines of credit and invoice finance take a few days to set up but are then available on demand. Applying before the gap bites, while trading looks strong, gets the best terms.
Can I use cash flow finance for wages, suppliers and tax?
Yes. Cash flow facilities are designed for operating costs such as wages, supplier payments, rent and tax, rather than buying assets. Lenders will want to see that the gap is timing rather than a structural loss, so consistent revenue in the bank statements matters.
How is a cash flow facility sized?
On the gap between costs falling due and revenue arriving, typically one to two months of operating costs for a line of credit, or a percentage of outstanding invoices for invoice finance. A broker works through your cash cycle and sizes the facility so it covers the gap without paying for headroom you never use.