The importer's cash cycle: how long your money is really at sea

A profitable importer can still run out of cash. It happens when the business grows faster than its cash cycle allows — bigger orders, more lines, more customers on account — and the money tied up in stock and receivables outruns what’s coming in. The cure starts with a number most importers have never measured: how many days their money is actually out.

What is the importer’s cash cycle?

For any business that buys and sells stock, the cash cycle is the time between paying for goods and getting paid for them. Accountants often calculate it as:

Cash conversion cycle = days of inventory + days of receivables − days of payables

For importers, that formula can mislead, because you often pay suppliers before you receive anything — your “days of payables” can be negative. A more practical version for importers is simply:

Days from paying the supplier’s deposit to collecting payment from customers for that stock.

What does a typical importer’s cycle look like?

Illustrative only. Here’s a wholesaler importing homewares for sale to retailers on 30-day terms:

Stage	Days	Running total
Deposit paid → production finished, balance paid	49	49
Shipment → arrival	28	77
Clearance and delivery to warehouse	7	84
Selling most of the stock	70	154
Customer payment terms	30	184

Around 184 days — six months — from first dollar out to last dollar back. Compare that with a business buying locally on 30-day terms and selling in 70 days: its cycle might be under three months. The importer earns a better margin, but carries its money for twice as long.

Use the import cash timeline planner to lay out your own dates.

How much working capital does the cycle need?

A rough rule: working capital needed ≈ average daily spend on stock × days in the cycle.

If the wholesaler above spends $1.2 million a year on landed stock — about $3,300 a day — and its cycle is 184 days, it needs around $600,000 working in stock and receivables at any time. That money has to come from somewhere: the owners’ capital, retained profits, supplier credit or a funding facility.

This is why growth squeezes importers. Increase sales by 30% with the same cycle, and the working capital needed rises by 30% too — before the extra profit arrives. Unsecured and line-of-credit options for trading businesses typically run from $5,000 to $500,000, sized on turnover and bank statements; beyond that, property-secured loans run from $20,000 to $5,000,000. If you’d like to talk through what fits your cycle, send a short enquiry — no credit check to ask.

What are the five levers that shorten the cycle?

1. Supplier terms

A smaller deposit or a later balance trigger reduces how long cash is out before goods arrive. Moving the balance from “before shipment” to “against copy bill of lading” might save a week; moving to “30 days after bill of lading” can save a month. See our guide to negotiating deposit terms.

2. Lead time

Shorter production runs, better-planned bookings and fewer delays at the port all cut days. You can’t make ships faster, but you can make sure documents and payments are ready so goods clear on arrival. See demurrage and port delays.

3. Sell-through speed

Often the biggest lever. Look at sell-through by line: the fast movers subsidise the slow ones. Cutting slow lines, ordering them in smaller quantities or pre-selling to trade customers before arrival can take weeks out of the cycle.

4. Customer terms

Every day your customers take to pay is a day you fund. Invoice promptly, follow up before the due date, and consider tighter terms or small early-payment incentives for larger accounts.

5. GST timing

Import GST paid at the border and claimed back on a quarterly BAS can be out of your account for months. Monthly lodgement shortens that, and the ATO’s deferred GST scheme — for eligible businesses — removes it from the border altogether.

How do you measure your own cycle?

1. Pick three recent orders. Ideally typical ones, not your best or worst.
2. Record the dates of the deposit, balance, freight payment, border payment and warehouse arrival.
3. Track sell-through — the date by which roughly 80–90% of the order had sold.
4. Add your average customer payment time — actual, not the terms on your invoices.
5. Average the three for a realistic cycle.

Then calculate the working capital your current volume needs, and see how it compares with what you actually have. If there’s a gap, it’s usually showing up already — as late supplier payments, tight BAS months or a stretched overdraft.

What does a shorter cycle actually save?

Illustrative only. Using the wholesaler above, suppose it negotiates the balance to be paid against copy bill of lading (saving 7 days), trims sell-through by dropping two slow lines (saving 14 days), and tightens collections so customers pay closer to terms (saving 8 days). The cycle falls from 184 to 155 days. At $3,300 a day of stock spend, that’s about $96,000 less working capital tied up — money that either doesn’t need to be borrowed, or can fund growth instead.

Change	Days saved	Working capital released (at ~$3,300/day)
Balance against copy bill of lading	7	~$23,000
Drop two slow lines	14	~$46,000
Better collections	8	~$26,000
Total	29	~$96,000

Where does finance fit?

Finance doesn’t shorten the cycle; it funds it. The healthiest approach is to shorten the cycle where you can, then fund what remains with a facility that matches the rhythm of your orders. For most regular importers, that’s a revolving import line of credit that’s drawn for deposits, balances and border costs and repaid as sales and GST credits come in. For others, it’s stock finance sized to a particular build-up of inventory.

The mistake to avoid is using finance to cover a cycle that’s getting longer without noticing why. If the facility never comes back down, look at sell-through and customer terms before asking for a bigger limit.

What warning signs suggest the cycle is stretching?

• supplier balances paid late, or only after chasing
• BAS payments that are hard to meet despite good sales
• a line of credit that stays near its limit all year
• increasing stock on hand without increasing sales
• customers taking longer to pay than they used to

Any one of these is worth a closer look at the cycle.

How does the cycle change as you grow?

Growth tends to lengthen an importer’s cycle, not just enlarge it. New product lines usually sell more slowly than established ones while customers discover them. New trade accounts often negotiate longer payment terms than existing ones. Bigger orders may qualify for better unit prices but take longer to sell through. And adding a second or third supplier means more overlapping deposits and balances.

None of this is a reason not to grow. It’s a reason to measure the cycle again whenever the business changes shape — a new range, a new channel, a new major customer — rather than assuming last year’s numbers still hold. Recalculate the working capital you need at the new volume and cycle length, and arrange funding before the growth arrives, not after it has already stretched the account.

Fund the cycle you’ve got, while you shorten it

Once you know your cash cycle, you know what you’re really asking a lender to fund. If it’s more than the business can carry, start a Trade Loan enquiry. There’s no credit check to ask, and your details aren’t passed around a crowd of lenders — a real person reads your enquiry and calls you to talk about your orders, your cycle and what would help. Accurate answers on the form, especially turnover and order sizes, mean we can point you in the right direction first time.