For Australian wholesalers, importers, manufacturers, retailers, and distributors, a growing order book can place real pressure on cash. Suppliers may require a deposit before production, payment before shipment, or settlement upon arrival of goods. 

Customers may pay 30, 60, or 90 days after delivery. Businesses looking to fund the cost of goods with trade finance can assess whether the repayment timing matches their sales cycle. 

ScotPac is an Australian and New Zealand specialist working capital provider, and its trade finance service is designed to help eligible businesses pay domestic or overseas suppliers for stock, inventory, raw materials, and finished goods.

This timing issue matters across Australia, from a Melbourne distributor preparing for seasonal demand to a Perth importer awaiting a container shipment to a regional manufacturer purchasing materials for a confirmed contract. Sales may be strong, but the business still needs enough available cash to meet its obligations before customer receipts arrive.

Why Strong Sales Can Still Create Cash Pressure

Profit and cash are not the same thing. A business can record revenue once it delivers goods or completes work, yet the bank balance will not improve until the customer actually pays. At the same time, supplier invoices, freight, wages, rent, insurance, tax obligations, and loan repayments may already be due.

Consider a wholesaler that pays $40,000 for stock today and sells it to business customers on 30-day terms. The sale may be profitable, but the cash used to buy the stock is unavailable until customers settle their invoices. If the wholesaler needs to place another supplier order before those receipts arrive, growth can create a funding gap rather than immediate cash relief.

Map the Cash Gap Before It Becomes a Problem

A practical cash flow review compares the money expected to arrive with every payment that must leave the business. The Australian Government’s guidance on preparing a cash flow statement can help businesses forecast cash flows, identify potential cash shortages, and plan accordingly.

Review each week or month using:

1. The opening bank balance.
2. Confirmed customer receipts and expected payment dates.
3. Supplier invoices, deposits, and purchase commitments.
4. Inventory, freight, customs, and storage costs were relevant.
5. Payroll, rent, tax, insurance, and debt payments.
6. The projected closing cash balance.

Use a Rolling Forecast Instead of a Static Budget

An annual budget provides a useful direction, but it may not show a shortage developing next month. A rolling 8 to 13-week forecast gives business owners a closer view of the trading cycle and should be updated when delivery dates, customer receipts, order volumes, supplier terms, or freight costs change.

Separate confirmed receipts from sales that are still expected but not contracted. It is also sensible to prepare best-case, expected, and worst-case scenarios. This helps decision-makers see the effect of a late-paying customer, a delayed shipment, or a larger-than-planned inventory purchase before committing to the expense.

Keep Inventory from Tying Up Too Much Cash

Inventory can be an asset on paper while reducing the cash available for everyday costs. For example, a retailer may buy additional stock to secure a supplier discount, only to find that the products sell more slowly than expected. The value remains in the inventory records, but it cannot pay wages or an overdue supplier bill until it is sold and collected.

• Review fast-moving and slow-moving stock separately.
• Base purchase quantities on realistic sales forecasts, not optimism.
• Set reorder points for essential items.
• Consider lead times, minimum order quantities, storage costs, and seasonal demand.
• Compare any early-payment or bulk-buy discount with the value of retaining cash.

Improve the Timing of Customer Payments

Faster collection does not solve every cash flow issue, but it can reduce unnecessary pressure. Send invoices as soon as goods or services are delivered, use clear payment terms in quotes and contracts, and follow up consistently when invoices become overdue.

1. Request deposits for large, customized, or made-to-order work.
2. Use progress payments for longer production or delivery cycles.
3. Check customer credit limits before accepting unusually large orders.
4. Confirm who receives invoices and whether purchase order details are required.
5. Escalate overdue accounts early and professionally.

Have Better Conversations with Suppliers

Supplier discussions are most useful before a major order is placed. Ask whether deposits, production payments, shipment payments, and final balances can be staged. For international purchases, clarify the payment currency, shipping terms, documentary requirements, and what happens if order volumes or delivery dates change.

Regular communication helps suppliers understand the business’s planned purchasing cycle. It may also make it easier to discuss revised terms when demand changes, rather than waiting until a payment is already overdue.

When Short-Term Funding May Fit the Trading Cycle

Short-term funding may suit a business with a clear and repeatable gap between paying a supplier and collecting from customers. It should be assessed on a case-by-case basis rather than treated as a default answer for every cash shortage.

• What supplier payment or purchase order will the facility support?
• When is repayment expected, and which customer receipts are expected to fund it?
• Is the customer order confirmed?
• What is the plan if production, shipping, or delivery is delayed?
• How will fees, interest, currency costs, insurance, and freight affect the margin?
• Does the facility support domestic suppliers, international suppliers, or both?

Warning Signs That Cash Flow Needs Attention

• Supplier payments are repeatedly delayed.
• Personal credit cards or unplanned borrowing are being used to cover business costs.
• Customer invoices regularly exceed agreed payment terms.
• Stock is ordered without a clear sales forecast.
• Tax, payroll, or loan payments are being pushed back.
• The business checks its bank balance but does not maintain a forecast.
• Higher sales consistently create more cash pressure.

A Simple Weekly Cash Flow Routine

1. Update the bank balance and outstanding payments.
2. Confirm which customer receipts are genuinely due that week.
3. Review supplier bills and purchase commitments for the next 30 days.
4. Check inventory requirements and upcoming orders.
5. Flag any gap between incoming receipts and required payments.
6. Contact customers, suppliers, or advisers early if the gap is widening.
7. Record what changed from the prior forecast and why.

Common Questions

What is a cash flow gap?

A cash flow gap is the period when business payments fall due before expected customer receipts arrive.

Can a profitable business still run out of cash?

Yes. Delayed invoices, rapid growth, large inventory purchases, seasonal demand, and long production cycles can all create cash pressure despite profitable sales.

Is trade finance the same as a standard business loan?

Trade finance is commonly structured around a particular purchase or trading cycle, while a standard business loan may provide funds for a broader business purpose. Suitability depends on the business, transaction, supplier arrangements, and expected customer receipts.

Plan the Gap Before It Opens

Supplier bills arriving before customer payments are a normal part of many Australian business models. The risk increases when the timing is not measured. A rolling forecast, disciplined inventory decisions, prompt invoicing, clear supplier communication, and funding matched to the trading cycle can help a growing business keep orders moving while maintaining control of cash.