Recognition
Big turnover, thin net margin, and a lender who doesn't read the difference
A freight forwarder or importer's turnover often includes a large pass-through element: duty, freight charges, and disbursements paid on a client's behalf and recharged. A generalist lender reading the accounts sees big turnover against thin net margin and reads it as weak. It isn't.
Why it happens
The money moves before the goods do
Duty and VAT are usually payable to HMRC before goods clear customs, sometimes well before the client has paid for the shipment. Forwarders holding their own duty deferment account get roughly a month's credit from HMRC on that duty, which helps, but disbursements (port fees, haulage, storage) often still need funding upfront.
Where this fits
A sector-specific challenge
This is the most validated of the sector-specific situations we cover. It routes primarily to Trade & Import Finance and, for the guarantee question specifically, Duty Deferment Guarantees.
Specialist insight
The duty deferment guarantee, specifically
Since January 2021, HMRC has waived the guarantee requirement for most UK-established businesses using a duty deferment account in Great Britain (see gov.uk guidance on duty deferment guarantee waivers). It usually still applies if: the business fails HMRC's waiver test (solvency, a clean three-year compliance record, systems access), the account is for Northern Ireland, or the business isn't UK-established.
Don't want your own DDA? Using a freight forwarder's existing account on your behalf is normal, established practice, not a workaround. Whether that's cheaper than qualifying for your own depends on volume.
The other gaps that don't show up in the duty conversation
Duty and VAT get most of the attention because HMRC sets a hard deadline on them. In practice, detention and demurrage charges, port congestion, and on-carriage costs create the same shape of gap: money owed to a third party before your own customer has settled, on a timeline you don't control. None of that shows up as WIP on a standard set of accounts the way it would in a services business, which is part of why a generalist lender misreads the cash cycle.
One thing we've noticed: forwarders usually describe their cash-flow problem as "duty" when what's actually biting is the disbursement account, demurrage on a delayed container, or a client paying on 60-day terms against costs that were paid out in days. Naming the actual gap, not the sector label, is what gets the right facility rather than a generic trade-finance product.
Decision helper
What typically fits
- A credit line for the disbursement/duty gap, sized for a recurring need rather than a one-off.
- A duty deferment guarantee, if the waiver test isn't met.
- Invoice finance once goods have cleared and a genuine customer invoice exists.
Alternatives and limitations
Assuming a guarantee is needed without checking the waiver test first is the most common mistake here. So is applying for finance using headline turnover figures that include the pass-through duty and disbursements rather than net revenue, which tends to distort what a lender actually sees.