Trade Finance NZ: Pay Suppliers Before Your Customers Pay You

What is trade finance?

Trade finance is funding for the gap between paying for goods and getting paid for them. If you import stock, the money goes out long before it comes back: a deposit when you order, the balance before shipping, freight, insurance and Customs charges on arrival, then weeks or months in your warehouse or on your shelves before customers buy.

For exporters it runs the other way. You pay for materials and production upfront, ship the goods, and wait for an overseas buyer to pay on terms.

Trade finance covers that stretch, so you can place bigger orders, take better supplier deals and keep enough cash in the business to run everything else.

What does a typical import cash cycle look like?

Here’s an illustrative timeline for a Kiwi business importing a seasonal range from Asia:

From deposit to final payment, the cash can be tied up for four to six months. Multiply that by two or three ranges a year and you can see why growing importers run short even when sales are strong.

What types of trade finance are there?

Import finance

Funding to pay overseas suppliers, sometimes paid directly to the supplier by the financier. You repay over a set period, often 90 to 180 days, matched to how fast the stock sells.

Supplier and stock finance

Funding to buy stock from local or overseas suppliers, sometimes secured over the stock itself. It suits wholesalers and retailers who need inventory ahead of their peak season. Our retail business finance page looks at seasonal stock from a shop owner’s angle.

Letters of credit

A bank undertakes to pay your supplier once agreed documents are presented, such as a bill of lading proving shipment. It gives a new supplier comfort, and gives you some control, but it involves fees, paperwork and usually a bank facility.

Documentary collections

Banks handle the exchange of shipping documents for payment. Less protection than a letter of credit, but simpler and usually cheaper.

Export finance and guarantees

For exporters, New Zealand Export Credit (NZEC), a business unit of the Treasury, offers products including loan guarantees to help small to medium exporters access more funding from their bank, short-term trade credit insurance against overseas buyers not paying, and guarantees for performance or payment bonds. These typically sit alongside a bank facility.

Trade credit insurance

Insurance against your customers not paying. It doesn’t give you cash directly, but it can make lenders more comfortable funding your receivables.

Who uses trade finance in New Zealand?

• Importers and wholesalers bringing in consumer goods, building products, machinery parts or food
• Retailers and ecommerce businesses buying ahead of Black Friday, Christmas or a seasonal range
• Manufacturers importing raw materials or components
• Exporters of food, beverages, timber and manufactured goods waiting on overseas buyers

What do trade financiers look at?

Dedicated trade finance tends to involve more paperwork than a standard business loan. Expect lenders to review:

• Your import or export history and how long you’ve been trading
• Supplier relationships, contracts and pro forma invoices
• Your customers and how reliably they pay
• Stock turnover and margins
• Business bank statements and financial accounts
• Existing security, including any general security registered on the PPSR

Pricing is set on your individual circumstances. We don’t quote rates, but expect cost to reflect the transaction’s risk, the currency and country involved, how long the funds are outstanding and the strength of your business.

How can LoansOne help importers and exporters?

LoansOne isn’t a specialist trade financier, and we won’t pretend to be. What we arrange is simple, fast funding that many importers use instead of, or alongside, a documentary trade facility:

• Unsecured business loans from $20,000 to $500,000, with no real estate security required in most cases. Ideal for supplier deposits, freight and Customs GST.
• 1st or 2nd mortgages for business purposes from $20,000 to $500,000, with no cash flow or financial records needed and bad credit OK. Useful for larger orders or when your accounts don’t yet reflect the growth.

Why business owners choose this route:

• No letters of credit or shipping document admin
• One lump sum that covers supplier, freight, GST and duty together
• Speed, with funding possible in as little as 24 hours in many cases
• No need to involve your supplier or change your payment terms

For ongoing stock and supplier gaps, our working capital loans page explains how to size the right amount.

Example scenarios

An Auckland homewares importer with a big Christmas range. The supplier offers a meaningful discount for a larger order but wants a 30% deposit now and the balance before shipping in August. The owner uses an unsecured loan to cover the deposit, balance and Customs GST, then repays it from November and December trading.

A Christchurch food exporter scaling up. A new overseas distributor wants three times the usual volume, paid 60 days after delivery. The business talks to its bank about an NZEC loan guarantee for the longer term, and uses a 2nd mortgage over the owners’ property to fund the first production run straight away.

A Hawke’s Bay ecommerce brand ahead of Black Friday. Stock has to land by early November. A short-term loan funds the order so the brand isn’t caught short during its biggest sales week.

These are illustrative scenarios, not real clients.

How much should you borrow for an import order?

Work it out from the full landed cost, not the supplier invoice:

1. Supplier cost, deposit plus balance
2. Freight and insurance to a New Zealand port
3. Customs GST at 15% and any duty on arrival
4. Port, cartage and storage costs
5. A currency buffer if you haven’t locked in a rate
6. Working capital to cover wages and overheads until the stock sells

Then subtract the cash you can comfortably commit without stretching the rest of the business. What’s left is your borrowing need. Remember that the import GST is usually claimed back in your next GST return, which can help you repay part of the loan early if the terms allow it.

What about currency risk?

Most imports are priced in a foreign currency, often US dollars, Australian dollars, euros or Chinese yuan. If the Kiwi dollar falls between placing your order and paying the balance, the same goods cost you more. If it rises, you win.

Importers manage this in a few ways:

• Paying sooner, which a short-term loan can make possible, so there’s less time for the rate to move
• Forward contracts through a bank or foreign exchange provider, which lock in a rate for a future payment
• Building a margin buffer into pricing for ranges that take months to land

Trade finance and currency planning go hand in hand. A cheap facility can be wiped out by a bad currency move, so think about both together.

Common mistakes importers make

• Forgetting Customs GST and duty in the cash plan. It’s claimable, but you still have to pay it first.
• Ordering on optimism. Order quantities should reflect realistic sell-through, not the best season you’ve ever had.
• Using the overdraft for stock that will take six months to sell, then running short on wages.
• Not checking supplier reliability before paying large deposits. Verify bank details by phone, every time, to avoid invoice fraud.
• Leaving finance to the last minute, so a supplier deadline forces a rushed decision.

Tips before your next order

• Build Customs GST and duty into your cash plan, not just the supplier invoice. The GST calculator helps.
• Allow for currency movements between order and payment.
• Match the loan term to how fast the stock will sell.
• Don’t use all your cash on stock and leave nothing for wages or rent.

Next step

Got an order to place and a supplier waiting on payment? Apply in about 30 seconds. It’s free, doesn’t mark your credit file, and an expert reviews your situation before matching you to the right lender. Or call 09-888 5252.