01
Supplier terms
Free. Moving from payment at shipping to thirty days after removes a month from the funded period, and a supplier that wants repeat orders has its own reasons to agree. It is asked for far less often than it is granted.
Guide
Four months of cash out before anything comes back.
Importing into New Zealand carries the longest cash cycle in ordinary commerce. Funding it properly starts with knowing what the cycle actually is, and most importers have never measured theirs.
MS
Matt Stiles Editor
Published 8 September 2026 Last reviewed 8 September 2026 Read time 13 min
The short version
Five lines before the detail.
- Size the facility on landed cost. Freight, insurance, duty and clearance can add 10% or more to the supplier invoice, and they fall due before anything sells.
- GST at the border is cash, not cost. It is paid on import and recovered through the return, subject to the accountant’s confirmation, and both halves matter to a funding plan.
- Supplier terms are the cheapest funding available. Thirty days from a supplier removes a month from the funded cycle at no cost, and it is asked for less often than it is granted.
- Delay is the usual unplanned cost. A vessel or clearance delay extends the funded period while the facility keeps charging, and building tolerance into the sizing is more useful than assuming a clean run.
- Indicative only. Every figure here is illustrative. Actual terms come from the funder, and customs and tax treatment come from the appropriate authority.
The cycle
Four stages, and what each one takes.
01
Order and deposit
A deposit, commonly 20% to 40%, is paid against goods that do not exist yet. Nothing is fundable at this point in the ordinary sense, since there is no shipment and no asset, which is why a trade facility assessing the business and its buying record is the instrument that reaches it. This is also the stage where supplier terms are negotiated, and the terms agreed here determine how much of the rest has to be funded.
02
Shipping and the balance
The balance falls due at or shortly after shipping, and it is the largest single payment in the cycle. Freight and insurance are payable around the same time. Where a letter of credit is in place, this is the point at which the bank pays against conforming documents rather than the importer paying directly.
03
Arrival, duty and clearance
Duty, GST and clearance costs fall due before the goods can be released. These arrive after everything else has been paid and before anything has been sold, which is why an importer with a facility sized on the supplier invoice alone is short at exactly this point. A customs broker can quantify them from the commercial invoice well in advance.
04
Sale and collection
The goods are sold, invoiced and collected. Where the sale is on credit terms this adds thirty to sixty days, and the receivable becomes fundable in its own right. Joining a receivables facility to the trade facility covers the whole cycle rather than the first half of it.
A worked cycle
A $200,000 order, with every cost in place.
Illustrative on stated assumptions for a general merchandise importer. Duty rates vary by tariff classification and are a matter for New Zealand Customs and a broker.
| Stage | Day | Amount | Cumulative out |
|---|---|---|---|
| Deposit at order, 30% | 0 | $60,000 | $60,000 |
| Balance at shipping | 35 | $140,000 | $200,000 |
| Freight and insurance | 38 | $14,000 | $214,000 |
| Duty and clearance | 72 | $11,500 | $225,500 |
| GST at the border | 72 | Paid, later recovered | |
| Stock available | 78 | $225,500 | |
| Sold and invoiced | 95 to 130 | ||
| Collected | 135 to 175 | Returns |
Illustrative on stated assumptions. Duty depends on classification and origin, and GST treatment is a matter for the accountant.
The sizing error
Landed cost is 13% above the supplier invoice here.
The supplier invoice is $200,000 and the cash requirement before a single sale is $225,500. A facility built on the invoice value leaves $25,500 to be found from the business at the moment it has least, and it is the most common structural mistake in import funding.
The remedy is straightforward. A customs broker can produce a landed cost estimate from the commercial invoice, the tariff classification and the freight quote, and it takes them a short time on information the importer already holds. Sizing against that figure rather than the invoice removes the problem entirely.
GST at the border sits alongside this and behaves differently. It is payable on import and recovered through the return, subject to the accountant’s confirmation of the timing and treatment, so it is a genuine cash outflow that comes back rather than a cost. It has to be in the cash plan and it should not be in the cost calculation, and importers regularly do the opposite of both.
The instruments
Four ways to fund the cycle, cheapest first.
These combine rather than compete, and an importer using only the last one is paying for the whole cycle when part of it was available free.
02
A letter of credit
A bank undertaking to pay the supplier against conforming documents. It provides security to both sides on a new relationship, adds cost and paperwork, and is worth most where the supplier is unproven.
03
A trade facility
A revolving limit against which shipments are funded. The funder pays the supplier and is repaid on conversion. This is the instrument that reaches the part of the cycle nothing else does.
04
A receivables facility behind it
Once the stock is sold on credit terms, the invoice becomes fundable. Joining the two covers the whole cycle, and using only one covers half of it.
The two risks
What can go wrong that is specific to importing.
Delay
The funded period stretches.
A vessel delay, a port disruption, a biosecurity hold or a documentation problem extends the cycle while the facility continues to charge. The goods are neither in the business nor sold, and nothing about the funding pauses.
For seasonal goods the cost is larger than the interest, because a range arriving after its season is worth considerably less than one arriving before it.
The practical response is tolerance in the plan rather than optimism. An importer sizing on a clean run and ordering to arrive the week the season starts has left no room for the ordinary.
Currency
The cost is not fixed until it is paid.
Where the supplier invoices in a foreign currency, the New Zealand dollar cost is unknown until payment or until it is hedged. A move against the business between order and payment reduces the margin on goods already committed and already priced.
On a $200,000 order a 5% move is $10,000, which on a thin retail margin can be most of the profit on the shipment.
Forward contracts and other hedging arrangements exist to fix the rate, and whether to use them is a commercial decision about certainty rather than a prediction about the currency. A bank or a foreign exchange provider is the right party to explain what is available.
The conversation to have first
Supplier terms are the cheapest lever and the least used.
Before any facility is arranged, the question worth asking a supplier is whether the balance can move from payment at shipping to thirty or sixty days after. It costs nothing, it removes that period from the funded cycle entirely, and in international trade it is an ordinary request rather than an admission of difficulty. Suppliers building a long-term relationship frequently agree, particularly after a few clean orders, and the importer that never asks pays for the whole cycle indefinitely.
Shortening the cycle
The changes that reduce the requirement permanently.
Ordering more often in smaller quantities shortens the average holding period and reduces the peak funding requirement, at a slightly higher unit cost and higher freight per unit. On slow-moving ranges that trade is frequently worth making once holding costs are counted properly.
Clearing and listing stock quickly on arrival ordinarily costs nothing at all. Goods sitting in a warehouse waiting to be booked in, photographed or listed are still funded and are not yet sellable, and the days lost there are entirely within the business’s control.
Invoicing the day the goods leave rather than at month end matters just as much at the far end of the cycle. On a hundred and fifty day cycle, ten days recovered at each end is thirteen percent of the funding requirement gone, and neither change costs anything.
Method
How this guide was written, and its limits.
The cycle described is a general shape drawn from how import transactions ordinarily proceed. Duty rates depend on tariff classification and origin and are published by New Zealand Customs, biosecurity requirements are set by the Ministry for Primary Industries, and both are matters for those agencies and for a customs broker rather than for a website.
GST treatment on imports depends on the business’s circumstances and accounting basis and is a question for its accountant. Nothing here is tax, customs or financial advice, and this site is not a lender, a broker or a registered financial adviser.
The documents
Four that decide whether a shipment clears smoothly.
Import delays are more often documentary than logistical, and each of these has stopped a container that was otherwise on time.
01
The commercial invoice
It has to match the goods, the value and the terms actually agreed. A discrepancy between the invoice and the shipping documents is the most common reason a letter of credit is not honoured on first presentation.
02
The bill of lading
The document of title for the goods. Who it is consigned to matters, particularly where a funder is paying the supplier and wants control of the shipment until it is repaid.
03
The packing list and origin documents
Tariff classification and preferential rates under a trade agreement both depend on what these say. An error here is a duty bill considerably larger than expected, discovered at clearance.
04
Biosecurity documentation
Where goods carry biosecurity requirements, the certification travels with them. Missing paperwork means a hold, and a hold on the wharf costs storage as well as time.
The broker
Why a customs broker is worth engaging before the first order.
A broker can classify goods, quantify duty and produce a landed cost estimate from a commercial invoice and a freight quote, which is the number a facility should be sized against. Engaging one before the first order costs a modest fee and removes the largest structural error in import funding.
They also know which goods attract biosecurity requirements and what documentation those need, which is information that is expensive to acquire by discovering it at the wharf. On a first import of an unfamiliar category, that alone justifies the engagement.
For a business importing regularly, the broker relationship is ordinarily continuous rather than transactional, and the value is in the classification decisions rather than the clearance paperwork. Those decisions are made once and apply to every shipment afterwards.
Scaling up
What changes when order sizes grow.
A business doubling its order size does not double its funding requirement in a straight line, because the cycle length changes too. Larger orders ordinarily mean longer holding periods unless sell-through grows at the same rate, and the funding requirement is the product of the two rather than of order size alone.
Suppliers frequently improve terms as volumes grow, which pulls in the opposite direction, and freight consolidates more efficiently at larger volumes. Both reduce the cost per unit of the cycle even as the total capital involved increases.
The measurement that keeps this honest is the cycle rather than the order book. A business tracking days as well as dollars sees whether growth is being funded efficiently or simply funded, and the two look identical on a profit and loss statement.
The first shipment
Why the first import costs more than the ones after it.
A first shipment carries costs that never recur. Classification decisions have to be made, a broker relationship established, documentation templates built, and a supplier relationship proved from nothing. It also carries the least favourable terms the supplier will ever offer, because there is no record to justify better ones.
That has a practical consequence for sizing. A business budgeting a first import on the economics of a mature importing operation will be short, and one that budgets the first shipment as an expensive learning exercise and the third as the real economics will not.
It is also an argument for starting smaller than the volume economics suggest. A first order sized to prove the supplier, the classification, the freight route and the sell-through costs more per unit and answers four questions that would otherwise be answered on a container the business could not afford to be wrong about.
Exporting, briefly
The mirror image, and why it is a different problem.
An exporter has the opposite shape. Production is paid for domestically and the receivable sits with an overseas customer, frequently on longer terms and in another currency, which makes the collection risk and the currency exposure larger than a domestic ledger would carry.
The instruments differ accordingly. Export credit arrangements, documentary collections and letters of credit issued in the exporter’s favour all address the risk that an overseas customer does not pay, which is a harder risk to manage than a domestic one because enforcement is harder.
This site covers the import side, because that is where the New Zealand working capital question most often arises. An exporting business with a substantial overseas ledger is looking at a related but genuinely different set of arrangements, and New Zealand Trade and Enterprise is a better starting point for those than any funding page.
The cost of the cycle
What funding one shipment costs.
A trade facility is drawn per shipment and repaid on conversion, so this approximates the cost of carrying one cycle at landed cost. Indicative only, and not a quote or offer of credit.
Indicative repayment
Weekly
$7,964/week
$34,510 /month $7,058 total interest
$200,000
$5,000 $500,000
6 months
6 months 5 years
12.00% p.a.
8% (secured) 30% (unsecured)
Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.
Sending to Prospa
Your $200,000 scenario
6 months at 12.00% . Prospa will ask a few quick questions, then provide a firm quote and funding if eligible.
Redirecting…
References
Sources
- New Zealand Customs Service
The published source for duty, tariff classification and clearance requirements.
- Inland Revenue, GST on imports
The published source for GST payable at the border and recovered through the return.
- Ministry for Primary Industries
The published source for biosecurity requirements that can affect clearance timing.
- New Zealand Trade and Enterprise
Context for international trade practice, documentation and supplier terms.
- Reserve Bank of New Zealand, exchange rates
The published source for the currency movement described in the risks section.
FAQ
Questions, answered
How long is a typical import cycle?
For a New Zealand importer selling on credit terms, commonly a hundred and twenty to a hundred and eighty days from deposit to customer payment. Seasonal ranges ordered well ahead run considerably longer.
What should a trade facility be sized against?
Landed cost rather than the supplier invoice. Freight, insurance, duty and clearance can add ten percent or more, and they fall due before anything can be sold, which is where an under-sized facility fails.
How do I work out landed cost?
A customs broker can produce an estimate from the commercial invoice, the tariff classification and the freight quote, using information the importer already holds. It takes them a short time and it removes the most common sizing error.
Is GST at the border a cost?
It is a cash outflow that is later recovered through the return, subject to the accountant’s confirmation of timing and treatment. It belongs in the cash plan and not in the cost calculation, and importers commonly get that the wrong way round.
What is a letter of credit for?
It is a bank undertaking to pay the supplier once documents matching the agreed terms are presented. It provides security to both parties, which matters most on a new supplier relationship, and it adds cost and paperwork.
Do I need both a trade facility and a receivables facility?
An importer selling on credit terms genuinely needs both. Trade finance covers order to sale and a receivables facility covers invoice to payment, and using only one leaves half the cycle unfunded.
What happens if a shipment is delayed?
The funded period extends and the facility keeps charging. On seasonal goods the larger cost is arriving after the season rather than the additional interest, which is why tolerance in the plan is worth more than optimism.
How is currency risk managed?
Where a supplier invoices in a foreign currency, forward contracts and other hedging arrangements can fix the rate. Whether to use them is a decision about certainty rather than a prediction, and a bank or foreign exchange provider is the right party to explain the options.
What is the cheapest way to reduce the funding need?
Supplier terms. Moving the balance from payment at shipping to thirty days after removes a month from the funded cycle at no cost, and it is an ordinary request in international trade.
Does ordering more often help?
It shortens the average holding period and lowers the peak requirement, at a higher unit cost and higher freight per unit. On slow-moving ranges the trade is frequently worth making once holding costs are counted properly.
What does a funder look at on a trade facility?
The buying record as much as the business, because the sale is what repays the facility. Purchase history, supplier terms, sell-through by range, and the stock and receivables positions all carry weight.
Is this guide financial advice?
No. It describes a trading cycle and the instruments that fund it in general terms. This site is not a lender, a broker or a registered financial adviser, and customs and tax treatment are matters for those authorities and for the business’s advisers.
Related
Keep reading
Trade finance
The facility that reaches the first half of the cycle.
Read onSupply chain finance
The same relationship viewed from the buyer’s side.
Read onBuying stock
What holding inventory costs beyond the funding.
Read onThe working capital cycle
Measuring the cycle rather than estimating it.
Read onAll eight products
Every facility compared in the same shape.
Read on