I’m Importing From China and My Supplier Wants an Upfront Payment

Importing goods can create a cash flow problem before the sale even begins.

Your supplier may want a deposit before production starts. They may want payment before shipment. Freight, customs, duties, GST, storage and local delivery may also need to be paid before your customers pay you.

That means your business may have a confirmed order, strong demand and a profitable product, but still be stuck because the cash is needed upfront.

The key question is not simply:

Can I get money to pay my supplier?

The better question is:

Which finance option fits the supplier payment terms, import timeline, stock cycle and customer payment timing?

Funding Loop is an Australian business finance marketplace that helps SMEs compare suitable business loan options in Australia across a panel of lenders. This may include business loans, a business line of credit, invoice finance, trade finance, equipment finance or asset finance, depending on the business situation.

This guide explains what options may be available if you are importing from China and your supplier wants a significant upfront payment before production or shipment.

First: Understand the Import Cash Flow Gap

Importing usually creates a timing gap.

The business may need to pay the supplier before the goods are produced, shipped, cleared, delivered and sold.

Before choosing finance, clarify:

• how much the supplier wants upfront
• when the balance is due
• whether payment is due before production or shipment
• whether the supplier has issued a pro forma invoice
• whether there is a purchase order from your customer
• whether the goods are already pre-sold
• how long production will take
• how long shipping will take
• what freight, customs, GST and duty costs apply
• when customers are expected to pay
• whether the margin still works after finance costs

This matters because the right finance option depends on the full trade cycle.

For a wider product framework, read business finance product diagnosis in Australia.

Decision Framework: Importing From China and Supplier Wants Upfront Payment

Use this framework before choosing a finance option.

The right option should match the import cycle, not just the invoice amount.

What Is Import Finance?

Import finance is a funding option that helps businesses pay suppliers, manufacturers or overseas trade costs before customer revenue is received.

It may be used for:

• supplier deposits
• production payments
• balance payments before shipment
• stock purchases
• import orders
• freight and logistics
• customs-related costs
• working capital tied to imported goods

Import finance can overlap with trade finance, stock finance and working capital finance.

The main point is that the funding is linked to the movement of goods and the timing between supplier payment and customer payment.

For more context, read trade finance for importers in Australia.

Why Supplier Upfront Payments Create Pressure

A supplier asking for an upfront payment is common in international trade.

The problem is that the business may not receive income until much later.

The timeline may look like this:

1. supplier deposit is paid
2. goods are manufactured
3. balance payment is requested
4. goods are shipped
5. goods arrive in Australia
6. customs, GST, duties and freight are handled
7. goods are delivered or sold
8. customer payment is received

This can create a long period where cash is tied up in stock.

If the business does not plan for the full cycle, it may run out of cash before the goods arrive or before customers pay.

Option 1: Trade Finance

Trade finance may be suitable when your business needs to pay an overseas supplier before goods are sold.

It may help with:

• supplier invoices
• import orders
• purchase orders
• stock purchases
• production payments
• balance payments before shipment
• timing gaps between supplier payment and customer payment

Trade finance may be relevant if:

• the supplier payment terms are clear
• the goods have a defined resale pathway
• the business has revenue to support repayments
• the landed cost and margin are understood
• the supplier and customer details can be assessed

Trade finance is not just about funding the supplier. It is about matching finance to the trade cycle.

For a deeper comparison, read trade finance vs invoice finance.

Option 2: Business Line of Credit

A business line of credit may suit businesses that import regularly and need flexible access to working capital.

Instead of applying for a new loan for every shipment, a line of credit may allow the business to draw funds when needed, subject to the facility terms.

This can help with:

• supplier deposits
• balance payments
• freight
• customs timing
• GST and duty timing
• repeat stock orders
• seasonal import cycles
• cash flow gaps

A line of credit may be useful if the business has recurring import orders rather than one single shipment.

Before choosing a line of credit, check:

• facility limit
• drawdown rules
• repayment requirements
• fees
• whether costs apply to drawn funds only
• how long the import cycle takes
• what happens if goods are delayed

The facility should match the business’s cash conversion cycle.

Option 3: Working Capital Business Loan

A working capital business loan may suit a defined import funding need.

For example, the business may need a fixed amount to cover:

• supplier deposit
• balance payment
• freight
• duties
• packaging
• warehousing
• local delivery
• short-term operating costs linked to the order

A business loan may work when the business needs one amount and can support scheduled repayments.

The risk is that repayments may start before the goods arrive or before customers pay.

Before accepting a working capital loan, compare:

• repayment amount
• repayment frequency
• total cost
• loan term
• fees
• early repayment rules
• security
• personal guarantees
• whether repayments match customer payment timing

For more detail, read how to compare business loans in Australia.

Option 4: Contract or Stock Finance

If the goods are being imported to fulfil a confirmed contract or purchase order, contract funding or stock finance may be relevant.

This may apply when:

• a customer has placed a confirmed order
• a contract has been signed
• the supplier invoice is linked to that order
• the business needs to fund stock before delivery
• customer payment will arrive after fulfilment

This type of funding is usually assessed based on the full transaction.

The lender may want to understand:

• customer quality
• supplier invoice
• purchase order or contract
• payment terms
• gross margin
• delivery timeline
• repayment source

For a related scenario, read my business just landed a big contract but I can’t fund the stock.

Option 5: Invoice Finance After Delivery

Invoice finance may not help before the goods are produced or shipped, because there may not yet be an invoice to finance.

However, invoice finance may become relevant after the goods have been delivered and an eligible customer invoice has been issued.

This may suit businesses that:

• sell to other businesses
• invoice customers after delivery
• wait for customers to pay
• have eligible unpaid invoices
• need cash flow before payment arrives

If the problem is paying the supplier before the goods exist, trade finance or a line of credit may be more relevant.

If the problem is waiting for the customer to pay after delivery, invoice finance may fit better.

Read more about invoice finance vs business loan.

Check the Landed Cost Before Borrowing

The supplier invoice is only one part of the cost.

Before borrowing, calculate the full landed cost.

This may include:

• supplier deposit
• balance payment
• freight
• insurance
• customs charges
• duties
• GST
• warehousing
• packaging
• local delivery
• finance cost
• currency movement
• delays or inspection costs

Then compare the landed cost against the expected sale price.

A product may look profitable before freight, duties and finance costs but become tight once all costs are included.

If the margin is too thin, finance may not be suitable.

What If the Goods Are Delayed?

Import delays can create repayment risk.

Delays may happen because of:

• production issues
• shipping delays
• customs clearance
• documentation errors
• quality control problems
• supplier disputes
• port congestion
• customer changes

Before borrowing, ask:

• What happens if the goods are delayed?
• Can the business still meet repayments?
• Is there a buffer in the timeline?
• Does the customer understand the delivery timing?
• Has the supplier been verified?
• Are payment terms documented?
• Is there insurance?
• Is quality control arranged before final payment?

The longer the import cycle, the more important the repayment buffer becomes.

What If the Supplier Is New?

Supplier risk matters.

Before paying a large upfront amount, consider:

• supplier history
• business registration
• references
• sample quality
• production capacity
• payment terms
• inspection rights
• refund or replacement policy
• shipping documents
• whether a trade assurance or escrow structure is available
• whether legal review is needed for the contract

Finance can help fund an order, but it does not remove supplier risk.

If the supplier fails to deliver, the business may still owe the lender.

What If You Are a Newer Business?

Newer businesses may find import finance harder, especially if they have limited trading history.

However, some lender pathways may still consider the business if the order, revenue, bank statements, supplier invoice and repayment story are strong enough.

A lender may look more closely at:

• business bank statements
• trading history
• supplier invoice
• customer orders
• director experience
• repayment capacity
• stock type
• landed cost
• margin
• customer payment timing

For more detail, read I’ve been trading 6 months and need $50k: what are my options?.

Will Applying Affect Your Credit File?

It depends on the process.

Funding Loop can help businesses explore suitable options without a credit check at the initial stage. A credit check may occur later if the business proceeds with a formal lender application.

This matters because importers often feel pressure to move quickly when suppliers are waiting for payment.

Applying to multiple lenders without a strategy can create unnecessary credit enquiries.

Read more about how to get multiple business loan offers without hurting your credit.

Common Mistakes to Avoid

Common mistakes include:

• focusing only on the supplier deposit
• forgetting freight, duty, GST and local costs
• not checking the full landed cost
• assuming the goods will arrive on time
• borrowing without checking the customer payment timeline
• using invoice finance before an invoice exists
• using a fixed loan when a line of credit may fit better
• not verifying a new supplier
• not checking repayment frequency
• applying to multiple lenders without strategy
• not reviewing security or personal guarantees

For more detail, read business loan red flags and traps Australia.

What Lenders May Assess

For import finance, trade finance or stock funding, lenders may assess:

• supplier invoice or pro forma invoice
• supplier details
• customer purchase order or contract
• stock type
• landed cost
• gross margin
• delivery timeline
• customer payment timing
• business bank statements
• trading history
• revenue
• repayment capacity
• existing debts
• director profile
• industry
• credit history
• whether security is available

A strong application explains the full cycle clearly:

Supplier payment → production → shipping → arrival → delivery or sale → customer payment → repayment source

If that cycle is unclear, the lender may find the request harder to assess.

Documents You May Need

Funding requirements vary by lender, product and loan amount.

For import finance or trade finance, lenders may request:

• supplier invoice or pro forma invoice
• purchase order
• customer contract
• business bank statements
• details of the goods being imported
• shipping or freight details
• payment terms
• landed cost estimate
• ABN or ACN details
• basic business and director information
• details of the funding purpose

Depending on the lender, product and amount, additional documents may sometimes be requested.

When Finance May Not Be Suitable

Finance may not be suitable if:

• the supplier is unverified
• the order is not confirmed
• the customer payment is uncertain
• landed cost is unclear
• margin is too thin
• goods may be difficult to resell
• the business cannot support repayments
• existing debts are already unaffordable
• supplier terms are not documented
• security or guarantees are not understood
• the business is relying on one risky customer or supplier

If finance is not suitable, the business may need to negotiate staged payments, ask for a customer deposit, reduce the order size, seek supplier terms, improve cash reserves or speak with an accountant before proceeding.

How Funding Loop Can Help

Funding Loop helps Australian SMEs compare suitable finance options across a panel of lenders.

If you are importing from China and your supplier wants an upfront payment, Funding Loop can help assess:

• what the supplier payment is for
• whether trade finance or import finance may fit
• whether a business line of credit may be more suitable
• whether contract or stock finance applies
• whether invoice finance may apply after delivery
• whether low-doc options may be available
• what documents may be required
• when a formal application and credit check may be required

Funding Loop is free for businesses to use. We are paid by lenders when a settled facility is arranged, so businesses do not pay Funding Loop a broker fee.

There is no guaranteed approval, and outcomes depend on lender assessment.

Frequently Asked Questions

Can I get finance to pay an overseas supplier upfront?

It may be possible, depending on the supplier invoice, import cycle, business bank statements, repayment capacity, landed cost, customer payment timing and lender assessment.

Is import finance the same as trade finance?

Import finance is often a type of trade finance. It usually relates to funding supplier payments, stock purchases and timing gaps in the import cycle.

Can I use invoice finance before the goods arrive?

Usually not. Invoice finance generally applies after goods or services have been delivered and an eligible invoice has been issued.

What documents might I need?

You may need supplier invoices, purchase orders, customer contracts, shipping details, business bank statements, landed cost estimates and basic business information.

What if my supplier wants a large deposit?

A large deposit may increase risk. Lenders may want to understand the supplier, payment terms, production timeline, stock type, customer demand and repayment source.

Can I compare import finance options without a credit check?

Funding Loop can help businesses explore suitable options without a credit check at the initial stage. A credit check may occur later if the business proceeds with a formal lender application.

Is import finance suitable for newer businesses?

It depends. A newer business may still be considered if the order is strong, revenue is active, supplier details are clear and the repayment story is realistic.

Is Funding Loop free for businesses?

Yes. Funding Loop is free for businesses to use. Funding Loop is paid by lenders when a settled facility is arranged, so businesses do not pay Funding Loop a broker fee.

Related Guides

• Business loan options in Australia
• Business line of credit
• Trade finance for importers in Australia
• Trade finance vs invoice finance
• Contract funding stock finance Australia
• Invoice finance vs business loan
• Multiple business loan offers with no credit impact
• Business loan red flags and traps Australia

Get Started

If your supplier wants upfront payment before production or shipment, the right finance option depends on the supplier terms, landed cost, import timeline and repayment source.

Funding Loop can help compare suitable finance options across a panel of lenders, including trade finance, import finance, business loans and lines of credit where available.

Explore business loan options in Australia or read more about trade finance for importers in Australia.

General information only - it doesn't take your situation into account. Consider whether a product suits your business before acting, and get independent advice where you need it. No credit check to see your options. A credit check only happens if you choose to formally proceed with a lender.