Funding stock and inventory without starving the rest of the business

Why does stock eat so much cash?

Because you pay for it long before it pays you. A retailer buying for Christmas pays the supplier in September or October. The goods sell in December. If some customers pay on account, the money lands in January. That’s three or four months where the cash is sitting on shelves instead of in the bank.

Every business that holds stock has this gap built into its model. Finance doesn’t remove it — it carries it, so the rest of the business can keep running while the stock does its job.

Which capital sources fund stock?

Situation	Capital source	Why it fits
Regular imports or large supplier orders	Trade finance	Pays the supplier, repaid after sale
Orders that come and go through the year	Line of credit	Draw for each order, repay as it sells
One-off bulk buy or pre-season order	Unsecured loan	Lump sum, set term, fast
Very large order, urgent	Second mortgage or caveat loan	Biggest amounts, same day possible from $20k–$250k
Steady online or card sales	Revenue-based finance	Repayments follow sales

How do you size a stock loan?

Work from sell-through, not hope:

1. Order value — what the supplier wants, including freight and duty.
2. Sell-through time — how long until most of it sells.
3. Payment time — how long until customers pay for what sold.
4. Margin — what’s left after cost of goods.

Then match the finance to steps two and three combined. A 90-day sell-and-collect cycle doesn’t belong on 30-day finance — or on a five-year loan.

When does borrowing for a discount make sense?

Suppliers often offer better pricing for bulk orders or early payment. Borrowing to take that discount works when:

• the discount in dollars is larger than the total cost of finance over the period
• you’re confident the extra stock will sell within the loan term
• storage, insurance and handling for the extra stock are accounted for

Illustrative example: a hardware wholesaler is offered an 8% discount on a $100,000 order if it pays upfront rather than in instalments. That’s $8,000 saved. If the total cost of a three-month loan for $100,000 is well under $8,000 and the stock reliably sells in that window, the loan pays for itself. (Illustrative only.)

Our page on supplier early-payment discounts looks at this in more depth.

What goes wrong with stock finance?

• Over-ordering. Finance makes it easy to buy more than will sell.
• Slow lines. Stock that sits for months ties up capital and erodes margin.
• Short facilities on long stock. Repayments due before the stock sells.
• Forgetting landed costs. Freight, duty and GST at import add up.

The working capital gap calculator shows how stock days affect total cash needs.

How fast can stock capital land?

• Smaller unsecured amounts — same day possible
• Property-secured, $20k to $250k — same day possible
• Property-secured, up to $5m — possible within 24–48 hours
• Trade finance — longer to set up, faster per order once running

If a supplier deadline is close, start your enquiry now.

A note on seasonal stock

Seasonal businesses face a sharper version of the same problem: the biggest stock purchase lands when cash is lowest, just before the busy period. Planning finance two or three months ahead — and opening a facility while statements still show last season’s strength — makes a big difference. See seasonal peaks.

Stock finance across business types

Business type	Typical stock pattern	Common capital
Online store	Seasonal ranges, imports	Revenue-based finance, trade finance
Bricks-and-mortar retail	Pre-season buying	Line of credit, short unsecured loan
Wholesale	Large range, many customers	Trade finance plus invoice finance
Manufacturer	Raw materials and work in progress	Line of credit, working capital loan
Hospitality	Perishable, fast-turning	Rarely needs stock finance
Trades	Materials per job	Contract or job-based funding

Managing stock to need less finance

The cheapest stock finance is stock you don’t need to fund. Practical steps:

• Review sell-through monthly and stop reordering slow lines.
• Clear dead stock — cash recovered at a discount often beats holding it.
• Order closer to demand where lead times allow.
• Negotiate consignment or sale-or-return for new lines.
• Use supplier terms fully before reaching for external finance.

Each of these shortens stock days and shrinks your working capital gap. The cash conversion cycle by industry guide shows how stock days affect different models.

Insurance and storage

Funding more stock means holding more value. Check that your insurance covers the increased stock level — especially in the peak, when you may be carrying far more than usual — and that storage is secure and suitable. Lenders sometimes ask about insurance for larger stock-related facilities.

Ready to fill the shelves?

Stock that sells is the best use of business capital there is. Finding out what’s available doesn’t involve a credit check, and we don’t throw your details at a dozen lenders — one specialist looks at your order and timing and calls you back. Share accurate figures for the order, how fast it usually sells and what the business can offer. See what your next order could unlock.