Stocked shelving and a folded delivery trolley in a closed shop

Working capital product

Paying a supplier months before the stock sells.

An importer pays before shipping and gets paid long after arrival. Trade finance funds that window, which is commonly the longest and least visible cash gap an importing business carries.

Last reviewed 8 September 2026

Indicative repayment

Weekly

Disclaimer

$5,973/week

$25,882 /month $5,294 total interest

Loan amount $150,000

$5,000 $500,000

Loan term 6 months

6 months 5 years

Indicative rate 12.00% p.a.

8% (secured) 30% (unsecured)

Apply directly with Prospa Why Prospa

Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.

The short version

Five lines before the detail.

It funds the longest gap most importers carry. From supplier payment to customer payment can be four to six months, and nothing else on this site covers the whole of it.
It pays the supplier directly. Funds ordinarily go to the supplier rather than to the business, which is part of how the funder controls what it is lending against.
Duty, GST and freight are separate. A facility sized on the invoice value alone leaves the landed costs unfunded, and those land before the stock sells.
It hands off to a receivables facility. The cleanest arrangement funds the goods until they are sold, then funds the invoice until it is paid, with the two joined up.
Indicative only. Every figure here is illustrative. Actual terms come from the funder after assessment.

The cycle

Where the money is, month by month.

The gap opens at order, when a deposit is paid against goods that do not exist yet. It widens at shipping, when the balance falls due against goods that are now on a vessel. It widens again at arrival, because duty, freight and clearance are payable before the stock can be sold at all.

Only then does the business have something to sell, and selling it on credit terms opens a further gap of thirty to sixty days. From the first deposit to the customer payment, four to six months is ordinary and longer is common on seasonal ranges.

Trade finance covers the first part of that, from supplier payment to sale. It is the piece that no domestic facility naturally reaches, because there is no invoice to fund and no asset in the business yet, only a payment made against a promise.

Order

Deposit paid

Shipping

Balance paid

Arrival

Duty, GST, freight

Sale

Invoice issued

A worked cycle

A $150,000 order, from deposit to payment.

Illustrative on stated assumptions. The point is where the cash sits and for how long, rather than any particular set of figures.

Stage	Day	Cash out	Cash in
Deposit at order, 30%	0	$45,000
Balance at shipping	30	$105,000
Freight and insurance	35	$9,000
Duty and clearance	70	$7,500
GST at the border	70	Paid and recovered later
Stock available to sell	75
Sold and invoiced	90 to 120		$240,000 invoiced
Customer pays	130 to 160		$240,000 received

Illustrative cycle on stated assumptions. GST treatment at the border is a matter for the accountant.

Reading the cycle

The landed costs are where sizing goes wrong.

A facility sized against the $150,000 supplier invoice covers the supplier and nothing else. Freight, insurance, duty and clearance add roughly $16,500 in the example above, and they fall due at the point the business has already spent everything and has not yet sold anything.

That is the most common sizing error in import funding, and it is entirely avoidable. Landed cost rather than invoice value is the figure the facility should be built around, and calculating it takes a customs broker fifteen minutes on a quote the business already has.

GST at the border is a separate matter again. It is payable on import and recovered through the return, subject to the accountant’s confirmation of timing and treatment, which means it is a genuine cash outflow that comes back later rather than a cost. Businesses that treat it as a cost overstate their funding need, and businesses that forget it entirely find it missing at the worst moment.

The instruments

Four ways an import is actually funded.

These are frequently combined rather than chosen between, and a funder will ordinarily assemble a package rather than sell one of them.

A trade finance facility

A revolving limit against which individual shipments are funded. The funder pays the supplier and is repaid when the stock converts, with each transaction drawn and cleared separately.

A letter of credit

A bank undertaking to pay the supplier once documents matching the terms are presented. It protects both parties on a first transaction, adds cost and paperwork, and matters most where the relationship is new.

Supplier credit

Terms negotiated directly with the supplier, which ordinarily costs nothing at all and is commonly underused. A supplier confident of repeat orders will frequently move from payment at shipping to thirty days.

A receivables facility behind it

Once the stock is sold and invoiced, the invoice becomes fundable. Joining the two facilities covers the whole cycle rather than half of it.

The negotiation worth having first

Thirty days from a supplier is cheaper than any facility.

Moving a supplier from payment at shipping to thirty days after shipping removes a month from the funded period at no cost whatever. It is the first thing worth trying and it is skipped surprisingly often, because asking feels like admitting to a cash problem. In practice a supplier that wants repeat orders has its own reasons to help, and the request is ordinary in international trade rather than exceptional.

The boundary

Where trade finance ends and receivables funding begins.

These two cover consecutive halves of the same cycle and are frequently confused, which leads to businesses funding one half twice and the other not at all.

Feature	Trade finance	Receivables facility
Funds	The supplier payment	The customer invoice
Period covered	Order to sale	Invoice to payment
What stands behind it	The goods and the business	The receivable
Repaid by	The sale, or the receivables facility	The customer
Available before a sale exists	Yes	No
Suits	Importers and distributors	Anyone invoicing on credit terms

An importer selling on credit terms genuinely needs both. Funding only the second half leaves the supplier payment uncovered, which is the part with no domestic alternative.

The trade

What it gives and what it costs.

What it gives

Funding for the one part of the cycle no domestic facility reaches
The ability to order at volumes the business could not otherwise pay for
Payment terms with suppliers that can be met without draining reserves
A structure that matches the funding period to the trading cycle
A route to scale for a distributor whose constraint is cash rather than demand

What it costs

Complexity, with more parties and more documents than any other facility here
Exposure to shipping delays, which extend the funded period without notice
Currency movement between order and payment where the invoice is not in dollars
Security over the business and ordinarily over the goods
A sizing exercise that has to include landed costs rather than invoice value

When it goes wrong

Three exposures specific to importing.

The shipment is delayed

A vessel delay, a port disruption or a customs hold extends the funded period while the facility continues to charge. The stock is neither in the business nor sold.

What happens:Additional funding cost and a season potentially missed, from an event outside anyone’s control.

The currency moves

Where the supplier invoices in a foreign currency, the cost in New Zealand dollars is not fixed until it is paid or hedged. A move against the business between order and payment reduces the margin directly.

What happens:A landed cost different from the one the pricing was built on, discovered after the goods are committed.

The stock does not sell

The facility was repaid from the sale, and the sale has not happened. Stock on a shelf is worth less to a funder than an invoice, and considerably less than the business thinks.

What happens:A facility that has to be repaid from somewhere else, which is the risk that makes buying decisions the real credit decisions here.

The third is the one to hold in mind. Trade finance funds a purchase decision, and the quality of that decision determines whether the facility is repaid. No funding structure improves a range that will not sell.

The process

What arranging a facility involves.

Generalised rather than specific to any funder. This is the most document-heavy facility on the site alongside debtor finance.

01
Trading and supplier history
What is imported, from whom, how often, and what the sell-through has looked like. A funder is assessing the buying decision as much as the business, because that is what repays the facility.
Documents commonly required
- Purchase history
- Supplier details and terms
- Sales history by range
02
Business assessment
Financial statements, management accounts, bank statements and existing facilities. Stock and receivables positions matter more here than in most applications.
Documents commonly required
- Financial statements
- Bank statements
- Stock and receivables reports
03
Structure and security
The limit, how individual shipments are drawn, what security is taken over the goods and the business, and whether a receivables facility is joined to it.
Documents commonly required
- Facility agreement
- Security documents
04
First transaction
A purchase order is presented, the funder pays the supplier, and the transaction runs through to repayment. The first one is slower than the ones after it, because the process is being established rather than repeated.
Documents commonly required
- Purchase order
- Proforma invoice
- Shipping documents

The honest limit

What a facility cannot do about the cycle itself.

Funding shortens nothing. The container takes as long as it takes, the customer pays when they pay, and a facility changes who carries the cost of that wait rather than the length of it. A business whose cycle is six months is running a six-month cycle whether or not it is funded.

The changes that actually shorten the cycle are operational. Supplier terms, order frequency, freight consolidation, how quickly stock is cleared and listed, and how promptly invoices go out after delivery all move the number, and several of them cost nothing. A business that shortens its cycle by three weeks needs less facility every cycle thereafter.

Funding and shortening are complementary rather than alternatives, and the ordinary mistake is to reach for the first without examining the second. The cash conversion cycle is the measurement that makes both visible, which is why it has a calculator on this site.

The cost of the window

What funding a cycle costs.

A trade facility is drawn per shipment and repaid on conversion, so this approximates the cost of carrying one cycle. Indicative only, and not a quote or offer of credit.

Indicative repayment

Weekly

Disclaimer

$5,973/week

$25,882 /month $5,294 total interest

Loan amount $150,000

$5,000 $500,000

Loan term 6 months

6 months 5 years

Indicative rate 12.00% p.a.

8% (secured) 30% (unsecured)

Apply directly with Prospa Why Prospa

Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.

References

Sources

New Zealand Customs Service
The published source for duty and clearance obligations referred to in the cycle above.
Inland Revenue, GST on imports
Backs the description of GST payable at the border and recovered through the return.
Ministry for Primary Industries
Relevant where imported goods carry biosecurity requirements that affect clearance timing.
New Zealand Trade and Enterprise
Context for the trade practices described, including supplier terms and documentation.
Reserve Bank of New Zealand, exchange rates
The published source for the currency movement risk described in this guide.

FAQ

Trade finance in New Zealand, questions answered

What is trade finance?

A facility that funds the period between paying an overseas supplier and being paid for the goods. The funder ordinarily pays the supplier directly and is repaid when the stock converts to cash.

How long a period does it cover?

For a New Zealand importer, commonly ninety to a hundred and eighty days from deposit to customer payment. Seasonal ranges ordered well ahead can run considerably longer.

Does it cover duty and freight?

Only if the facility is sized to include them. A facility built on the supplier invoice alone leaves the landed costs unfunded, and those fall due before the stock can be sold. Landed cost rather than invoice value is the right sizing basis.

What happens with GST at the border?

GST is payable on import and recovered through the return, subject to the accountant’s confirmation of timing and treatment. It is a cash outflow that comes back rather than a cost, and both halves of that matter to a funding plan.

Is a letter of credit the same thing?

No. A letter of credit is a bank undertaking to pay the supplier against conforming documents. It provides security to both parties rather than funding to the buyer, and it is frequently used alongside a facility rather than instead of one.

Who does the funder pay?

Ordinarily the supplier directly, rather than the business. That is part of how the funder controls what it is lending against, and it also means the arrangement is visible to the supplier.

What security is taken?

Ordinarily a general security agreement over the business, and frequently security over the goods themselves. Where an existing lender holds a general security, the positions have to be resolved before a facility can start.

What if the shipment is delayed?

The funded period extends and the facility keeps charging. Delay is the most common source of unplanned cost in import funding, and building some tolerance into the sizing is more useful than assuming a clean run.

How does currency risk work?

Where the supplier invoices in a foreign currency, the New Zealand dollar cost is not fixed until payment or until it is hedged. A move against the business between order and payment reduces the margin on goods already committed.

Does it replace a receivables facility?

No, it precedes one. Trade finance covers order to sale and a receivables facility covers invoice to payment. An importer selling on credit terms genuinely needs both, and joining them covers the whole cycle.

What is the cheapest way to shorten the cycle?

Supplier terms. Moving from payment at shipping to thirty days after removes a month from the funded period at no cost, and it is the first thing worth trying before any facility is arranged.

Is this page financial advice?

No. It describes how a product works in general terms. This site is not a lender, a broker or a registered financial adviser, and whether a facility suits a particular business depends on facts a website cannot see.