Stock and inventory finance for a bigger order, sooner

Stock is cash sitting on a shelf. For many New Zealand businesses, the busiest selling months are preceded by the heaviest buying months, and that’s exactly when cash is tightest. Stock and inventory finance lets you buy enough, early enough, to make the most of the peak.

When businesses fund stock

• Seasonal peaks. A garden centre stocking up in August for spring, a ski shop in March for winter, a gift retailer in October for Christmas.
• Supplier deposits. Manufacturers who require part payment when the order is placed.
• Bulk discounts. A supplier offers a meaningful discount for a larger order or early payment.
• New product lines. Launching a range that needs a minimum order.
• Importing. Paying overseas suppliers before goods ship, then waiting weeks for arrival and clearance.

The main options

Short-term loans

For a single, clearly defined order, a short-term loan is straightforward: borrow for the order, repay as the stock sells. Match the term to how long the stock will realistically take to sell.

Revolving credit

For businesses that buy repeatedly through the year, a line of credit is usually more efficient. Draw for each order, repay as sales come in, and draw again for the next. Interest applies only to what’s drawn.

Trade finance

Importers often pay suppliers well before goods arrive. Trade finance pays the supplier on your behalf, usually at shipment, and gives you time to receive, clear and sell the stock before repaying. It’s more specialised and suits regular importers.

Property-backed

For very large orders, or when the business wants to fund several seasons’ stock at once, a loan secured over property can provide more on longer terms. That’s a bigger decision, because property is at stake for a trading purpose.

What lenders look at

For unsecured stock funding, lenders look at:

• Recent bank statements, especially the same season last year.
• How quickly stock turns over: your gross margin and stock days if you know them.
• The supplier invoice or purchase order.
• Existing debts and repayments.
• Your plan for selling the stock.

A business that can show last year’s peak in its bank statements makes the lender’s job easy.

Avoid the overstock trap

Funding too much stock is a common and expensive mistake. Before ordering:

1. Look at sales for the same period last year, and the trend since.
2. Check how much unsold stock you already hold.
3. Consider a smaller initial order with a reorder option.
4. Make sure the loan term allows for slower-than-expected sales.

An illustrative example

A Tauranga outdoor and camping retailer sells about 45 percent of its year’s revenue between November and January. Its main supplier offers a significant discount on orders paid in full by the end of September, and the retailer wants to place a $180,000 order.

The business has a revolving facility with a $100,000 limit and a clean record. It draws the full $100,000 and arranges a separate four-month short-term loan for the remaining $80,000. Sales through summer clear the short-term loan in January and bring the revolving balance down to zero by February, ready for the next cycle. The supplier discount more than covers the finance cost.

Getting funded quickly

• Have the supplier invoice or purchase order ready.
• Link bank statements that include last year’s peak season.
• Know your current stock levels and what’s already on order.
• Have every director ready to sign online.

With that in place, same-day funding is possible for smaller unsecured amounts.

Find the right route

Our funding speed finder compares routes for your amount and deadline.

Paying suppliers overseas

Importers face an extra delay: goods paid for at the factory can take six to ten weeks to ship, clear customs and reach the shelf. Currency movements add another layer of cost. If you import regularly, talk to your bank about locking in exchange rates for known orders, and allow for shipping delays when you set the loan term. A loan timed to repay before the stock has even arrived creates exactly the squeeze you were trying to avoid.

Track stock turn

Knowing how many days stock sits before it sells helps you choose the right term. If a line typically sells in 60 days, a 90-day facility gives you breathing room without paying for time you don’t need. Most accounting and point-of-sale systems can report this.

Ask us first

Asking what’s possible doesn’t touch your credit file, and we don’t send your enquiry to a long list of lenders. A real person reads it, looks at your buying cycle and calls you with an option that fits. Start your enquiry.