Supplier wants payment upfront

Your customer is waiting, the job is booked, and the supplier has just said they won’t release the goods until the invoice is paid. Maybe your account terms have been pulled. Maybe it’s a new supplier who doesn’t know you yet. Either way, the order can’t move until the money does.

This is a classic short, sharp funding need: a known amount, a clear purpose and, usually, a clear way to repay once the goods are sold or the job is done.

Find out why first

A quick call to the supplier is worth it before you borrow. The reason changes the right fix:

Supplier’s reason	What it suggests
New account, no history yet	One-off upfront payment; build terms over time
You paid late before	Pay this one, then agree a plan to restore terms
Their own cash is tight	Ask if a deposit now and balance on delivery works
Credit insurer cut your limit	Ask what would restore it; often recent accounts help
Policy for large orders	Consider splitting the order or a deposit arrangement

Sometimes the supplier will accept a deposit with the balance on delivery, which halves what you need to borrow. It’s worth asking.

How fast it can move

Supplier payments are well suited to fast funding. The amount is fixed, there’s an invoice and the lender can often pay the supplier directly. With online banking linked on the first call, ID ready and every director able to e-sign, same-day funding is possible for smaller unsecured amounts once the file is complete. Direct payment also tends to reassure the supplier, so goods are often released sooner.

For larger orders, or where the business is newer or credit is patchy, a property-secured loan may be the more realistic route, with $20k to $250k possible same day once title, value and signers are sorted.

What to have ready

• The supplier’s invoice or pro forma, showing the amount and their bank details.
• The supplier’s terms in writing, including any deposit option.
• The customer order or job the goods are for, if you have it.
• Online banking ready to link.
• Photo ID for each director.

Repayment should match the goods

The cleanest loans are repaid from the thing they fund. If the stock sells in six weeks, a six-to-ten-week loan suits it. If the goods go into a job paid in stages, match repayments to the stage payments. Locking a quick stock purchase into a long loan means paying for money long after the goods have gone.

An illustrative example

A Geelong flooring business wins a $96,000 commercial job. Its timber supplier, recently taken over, cancels the business’s 30-day account and asks for $38,000 upfront before delivery. The installation starts in four days. The owner sends the pro forma invoice and the signed contract, links statements and takes a short unsecured loan paid directly to the supplier. The timber arrives on time, and the loan is repaid from the first progress payment. Meanwhile, the owner applies for a new trade account with the supplier’s new owners. Illustrative only.

When upfront payment becomes the norm

If more than one supplier now wants paying first, or the same one does every month, a short loan each time gets expensive and starts to look like stacking to lenders. Better options include:

• A cash flow loan or line of credit you draw on for supplier payments and repay as sales land.
• Rebuilding trade credit by paying on time for a few months and asking for terms back.
• A second supplier with standard terms, so you’re not dependent on one.
• Shorter terms with your own customers, so cash comes in faster. Our page on customers paying late has ideas.

Protect yourself when paying upfront

Paying a supplier in full before delivery shifts the risk to you. Before you send money, especially to a new supplier, check their ABN on the ABN Lookup register, confirm bank details by phone using a number you already trust rather than one on the invoice, and get the delivery date in writing. Invoice fraud, where scammers change bank details on a genuine-looking invoice, is common. A lender paying the supplier directly will usually verify details too, but it’s worth your own check.

Overseas suppliers

International orders add steps. Allow time for the transfer, check who bears currency movements and remember freight, customs and GST on import. Include those in what you borrow, because getting the goods paid for and then stuck at the port solves nothing.

Get the goods moving

Tell us what the supplier needs, by when and what the goods are for. Asking doesn’t touch your credit file, your details aren’t sent to a dozen lenders, and one real person reads it and calls you. Send the invoice and accurate figures and we can move at the pace the order needs. Start your enquiry here, or plan it first with the route planner.