How do I finance freight and production costs when importing goods?

The mistake is looking for a single facility that covers the whole journey. Importing has four distinct funding stages, each has a product built for it, and the cheapest structure usually combines two rather than stretching one across everything.

The cycle, and what funds each stage

Production, before anything ships. Your supplier wants paying to make the goods and you have not been paid by anyone. Purchase order finance pays the supplier directly against a confirmed order from your customer. It works for young businesses too, because the lender is largely assessing the company that placed the order rather than you. It needs a firm written order, though: quotes and forecasts cannot be funded.

Purchase and shipping. Trade finance funds the buy, and where the supplier needs certainty before despatch, a letter of credit gives them a bank-backed promise of payment against shipping documents. This is where freight and duty sit. Some facilities will fund landed cost including freight, insurance and duty; others fund the goods value alone and leave you to carry the rest. Ask explicitly what the facility covers, because it is one of the more common surprises and it can be a substantial share of the total on low-value, high-volume goods.

Goods landed, not yet sold. Stock finance advances against inventory sitting in your warehouse and reduces as it sells. Worth knowing before you apply: the lender values your stock on what it would fetch if the lender had to sell it in a hurry, not on what you paid or what you will sell it for. That figure is usually lower than owners expect.

Sold and invoiced, waiting to be paid. Invoice finance releases typically 80% to 90% of the invoice within 24 hours, and the line grows as you sell more.

The pairing most importers land on

Trade finance at the front, invoice finance at the back. Trade finance covers buying and importing, invoice finance covers the wait to get paid, and between them they close the whole cycle. Where the constraint is a specific large order you cannot fund, purchase order finance at the front and invoice finance at the back does the same job for that one deal.

For long lead times where goods sit before selling, stock finance fills the middle.

The number that decides it

Whether any of this works comes down to whether the finance cost sits comfortably inside your gross margin.

Import cycles are long. Goods paid for in one quarter may not be sold until the next, and you are paying for the funding throughout. On thin margins the maths often fails, and it is better to find that out before committing to the order than after the container has shipped.

Run the total cost of funding against the gross profit on the deal, not against the sale price. If the answer is marginal on paper it will be worse in practice, because lead times slip.

Where to start

Tell us what you are importing, the lead time from order to sale, who your customers are and what your margin looks like. We will tell you which combination fits and, just as usefully, whether the deal actually supports the cost of funding it.