Cash cycle, not product
Trade and import working capital
An importer pays for goods before they exist as stock, pays duty and VAT before they can be sold, and then waits on customer terms after that. The whole cost sits before the invoice, which is exactly where a receivables facility cannot reach. That is why importers with healthy margins and reliable customers still run out of cash.
Recognition
The money goes out long before it comes back
The import cycle front-loads almost everything. A deposit to the supplier, often before production starts. The balance on shipment or on documents. Freight. Duty and import VAT at the border, payable before the goods can be released and sold. Then storage, then a customer who pays on terms. A business can be profitable on every single line and still be permanently short, because the gap between the first payment and the final receipt can run to months.
Why the usual facilities miss it
Receivables finance starts too late
Invoice finance advances against a raised invoice. For an importer, the invoice is nearly the last event in the cycle, which means the facility arrives after the cash pressure has already been absorbed from somewhere else. An overdraft is technically available across the whole cycle, but it is sized to a fluctuation rather than to a purchase, and it is repayable on demand, which makes it a poor foundation for committed stock buying. The mismatch is one of timing, not of creditworthiness.
Where the cash sticks
The stages that actually bite
Where the cash sticks, roughly in order
- Supplier deposits. Cash out with nothing yet to secure against. Trade facilities that pay suppliers directly reach this stage; almost nothing else does.
- Stock in transit. Goods exist, are paid for, and are not yet anywhere you can sell them. Whether this is fundable depends heavily on documents and title.
- Duty and import VAT. Payable at the border, before any sale. Duty deferment changes the timing of this, and is the cheapest single fix available to many importers.
- Landed stock. Now an asset, and now fundable by facilities that lend against inventory rather than only against invoices.
- Customer terms. The receivables stage, and the only one a conventional invoice finance line addresses.
- FX, running across all of it. The cost is fixed in one currency and the revenue in another, and the exposure is longest exactly when the cash gap is widest.
Which stage is binding determines the facility. The fuller version of this diagnosis, across all trading businesses rather than importers specifically, is on the facility mismatch page.
Resolution paths
What tends to fit
- Supplier deposits and stock. An asset-based facility that lends against inventory as well as receivables reaches further than a receivables line.
- Duty and VAT at the border. Deferment is usually the first thing to fix, because it is a timing change rather than new borrowing.
- Disbursements carried for customers. For forwarders and distributors, see freight and forwarding.
- Customer terms, once invoices exist. If the requirement is genuinely a better receivables facility rather than pre-invoice funding, see invoice finance.
For how the trade finance products themselves fit together, see Trade & Import Finance.
What we do
Introduction, after the diagnosis
Established Finance is an introducer, not a lender. Where a case needs more specialist handling, we may introduce you to a specialist provider. This page is information rather than advice.
Talk it through
Need another perspective?
You may already know which facility you think fits. The more valuable question is whether it's actually the right structure for what's happening in the business. We'll review the situation before suggesting possible routes. It costs nothing to have that conversation.
Thank you. It's with our team now.
A person reads every enquiry and we'll come back to you with what we think the right next step is. No obligation at any point.
What happens next
- A person on our team reads it. No need to know which facility you want first.
- If we can help, we may introduce you to a provider and tell you who they are.
- No charge and no obligation at any point. You decide whether to go further.
Adam Parker
Founder of Muswell Rose Consulting Ltd, which trades as Established Finance · former Managing Director of Penny, an invoice finance business, working in mortgages, commercial finance and fintech lending since 2010 (career history).
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Practical questions
Before you get in touch
How long does it take?
It varies by facility, so there isn't one number that fits every case. Some drawdowns against an existing facility complete within a day or two; arranging something new from scratch usually takes longer. We'll give you a realistic timeline once we understand your situation.
What information do I need?
To start, just a description of what’s actually happening in the business. If it progresses, the provider will ask for the usual things: recent accounts, a sense of turnover and trading history, and details of the specific need.