Trade finance · Stock and inventory finance
Trade finance for Stock and inventory finance
Stock and inventory finance is funding used to buy goods for resale ahead of the season or contract that will sell them, repaid from the sales proceeds rather than from existing working capital.
How trade finance works for Stock and inventory finance
Trade finance is purpose-built for imported stock. The facility pays the supplier at deposit and shipment and gives you a term of 90 to 150 days to receive, sell and collect, which covers the whole cycle for most importers. It effectively converts a supplier demanding payment up front into one offering generous terms. Facilities revolve as goods are sold and new orders placed. Include freight, duty and GST in the funded amount rather than paying those from cash on arrival.
The cash-flow pattern we plan around
Cash committed to inventory two to four months before the selling season, with proceeds arriving across the season itself and slow-moving lines tying up capital longer.
What stock and inventory finance typically fund
- Seasonal stock ahead of a peak trading period
- Supplier deposits and shipment balances on imports
- Volume buys to secure a better unit price
- Inventory for a new contract or product line
Trade finance for Stock and inventory 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 stock and inventory finance usually need | ABN, GST registration and 6–12 months of bank statements · Purchase orders or supplier proforma invoices · Stock turn and sales history for the relevant lines |
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
Inventory finance
Inventory finance is short-term funding used to purchase goods for resale, repaid as the stock sells, and sized against expected sell-through rather than against the total value a supplier is willing to ship.
Stock turn
Stock turn is how many times inventory is sold and replaced over a period, and it determines how long a finance facility must run before the goods it funded have generated the cash to repay it.
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 stock and inventory finance
How does trade finance work for buying stock?
The lender pays your supplier, local or overseas, and you repay the lender 90 to 180 days later from the sales of that stock. It is revolving, so each purchase is its own transaction, and it suits importers and wholesalers with margins that cover the cost. Letters of credit and foreign currency payments can be included.
What is the best way to fund seasonal stock?
Trade finance for supplier payments, a line of credit for deposits and top-ups, and for retailers with strong card sales a merchant cash advance repaid from takings across the season. Applying two to three months before the season starts allows time for the facility to be set up before supplier deposits are due.
Can I borrow against stock I already hold?
Rarely on its own, because stock is hard for lenders to value and sell, but businesses with commercial debtors can use invoice finance to release the cash tied up in the sales cycle, and a general security agreement over the business can support a line of credit. A broker structures the combination.
What do lenders want to see for inventory finance?
Gross margin, stock turn, supplier terms, a sales history for the products and, for trade finance, supplier invoices or pro forma orders. Established importers and wholesalers with consistent sales are approved quickly; new product lines need a sales plan.