Stock and supplier funding for New Zealand businesses

Stock is money sitting on a shelf. For retailers, wholesalers, hospitality businesses and manufacturers, the cash has to leave the account before it can come back as sales — and the bigger the order, the bigger the hole in between. Stock and supplier funding is about covering that hole without starving the rest of the business.

When do businesses need stock funding?

The most common triggers we see from Kiwi businesses:

• Pre-Christmas buying. Retailers often order in August and September for November and December trade.
• Import deposits. Overseas suppliers frequently want a deposit at order and the balance before shipping, months before goods clear the port in Auckland or Tauranga.
• Bulk-buy opportunities. A supplier offers a meaningful discount for a larger order or early payment.
• New product lines that need a first order before you know how fast they sell.
• Seasonal inputs — fertiliser, packaging, chemicals and seed for rural and horticultural businesses.
• A big customer order that needs materials bought up front.

How should stock funding be structured?

The golden rule is to match the term to the turnover. If stock usually sells within eight weeks, a three-to-six-month facility makes sense. Funding fast-moving stock with a multi-year loan means paying for money long after the stock is gone.

Situation	Suitable structure
Regular reorders every month or two	Business line of credit — draw and repay with each cycle
One-off seasonal buy	Short-term unsecured loan over three to six months
Large import order with long lead time	Short-term loan or property-secured bridging
Ongoing growth in stock levels	Working capital loan or a larger revolving limit

Does a bulk discount justify borrowing?

Here’s an illustrative way to think about it. Suppose a supplier offers a hardware retailer a sizeable discount on a pallet order if paid upfront. The owner should compare:

1. The dollar value of the discount.
2. The total cost of finance for the period the stock takes to sell — a figure the lender will give you.
3. The risk that some of the stock sells slowly or needs marking down.

If the discount clearly outweighs the cost of finance and the risk is low, borrowing makes commercial sense. If it’s marginal, it’s usually better to pass. We never quote rates on this site because every loan is priced individually, but we will give you real figures to compare once we understand your situation.

What about GST and duties on imports?

Imported goods generally attract GST at the border, and some attract duties, collected by New Zealand Customs before release. You can usually claim the GST back on your next return if you’re GST-registered, but you still need the cash on the day. Many importers forget this when budgeting for an order, so include it in the amount you borrow.

What will a lender ask?

• Recent business bank statements
• What you are buying, from whom and for how much
• How quickly the stock usually sells, and at what margin
• Your existing supplier terms
• Whether property is available to secure a larger amount

You can see what’s possible in about a minute before you commit to a supplier — there’s no credit check when you enquire.

Should a supplier’s own credit terms come first?

Before borrowing, ask your supplier whether they offer trade credit — 30, 60 or even 90 days for good customers. Supplier credit is often the cheapest stock finance available. Funding then covers only what supplier terms don’t. When suppliers insist on cash upfront, especially overseas ones, short-term funding fills the gap.

An illustrative example: a small Auckland homewares importer orders containers from Asia twice a year. Each order needs a deposit eight to ten weeks before shipping and the balance before departure, then the goods spend several weeks at sea and a few days clearing customs. By the time stock reaches the warehouse, the business has been out of pocket for three months. A revolving facility sized to one container lets the owner fund each cycle and clear the balance as sales come through, without dipping into money set aside for wages or tax.

How to avoid overstocking with borrowed money

• Use your own sales data. Base order sizes on what sold last season, not on hope.
• Stagger orders where suppliers allow it, so you fund smaller amounts more often.
• Watch your stock turn. If inventory is turning more slowly than it used to, borrowing to buy more makes the problem worse.
• Keep a buffer for tax. A big stocking month is often followed by a big GST return once the goods sell.

Fund the order, keep the business moving

If a stock order, supplier deposit or import payment is due before the sales arrive, let’s work out the cleanest way to fund it. No credit check is run when you first get in touch, we don’t hand your details to a string of lenders, and you’ll speak with a real person who works out what fits.

Accurate answers on the form — the amount, what it’s for and how long you’ve been trading — help us find the right option at the first attempt. Ask about stock funding.