"We're a UK supplement brand doing about £2m a year. Q4 is our biggest window and we need to land a £300,000 stock order before it. How should we fund the build?" Match the money to the life of the stock. A stock build that clears in four or five months should be funded with money that clears in the same window: supplier terms first, then the rung that ends when the stock does. In the illustrative example below, a £2m brand needs about £200,000 for four months, and the gap between the cheapest sensible route and the most expensive one runs past £15,000 of avoidable cost. Here is the ladder, rung by rung, with what each one actually charges.
One thing before the numbers: this is primarily a cash timing problem. Paying for stock does not reduce profit when the cash leaves; the cost lands when the stock sells, or earlier if it is impaired. But finance charges hit profit too, and so does a slow sell through, which is why the funding you choose is a margin decision, not just a banking one.
Here's the Short Version
- Fund stock with money that ends when the stock does. A four month cycle wants short term finance that clears with the stock, not permanent equity
- The order commonly runs on 30/70 terms: a 30% deposit, then the 70% before the goods ship. Terms vary with the supplier and the relationship, so treat the split as a starting position
- In the illustrative example, a £2m brand funding a £300,000 stock order needs about £200,000 of outside money for about four months
- The ladder to work down: supplier terms, then invoice finance (discount charge about 5.5% to 8.25% a year on drawn funds, service fees on top), bank facilities (roughly 7% to 15%), stock finance, then revenue based finance (5% to 10% flat). Get like for like quotes, because the ranges overlap
- Ask every lender for the cost in pounds over the full period, not a headline rate. A flat fee is not comparable to an annual rate until you convert it
- Two customs timing levers may be available: postponed VAT accounting and a duty deferment account
- The quiet killer is length. Fast money on slow stock, or a facility that does not line up with how the stock actually turns, both eat the margin the buy was supposed to make
The Cash Gap You're Actually Funding
Start with the timeline, because it decides everything else. A supplement order for Q4 usually follows this shape. The order goes in during August or early September, with a 30% deposit. That split, 30% on order and 70% before shipment, is a common starting structure with Chinese manufacturers, though terms vary with the supplier, the relationship, the order size and the payment method. Production commonly takes four to six weeks once the formula, artwork and regulatory specifications are approved, and new product development can add months on top. The balance is due before the goods ship. Then the container sits on the water for 30 to 40 days, which matches the current forwarder schedules for Shanghai to Felixstowe, and takes another week or two to clear customs and reach your 3PL.
So the money leaves in two chunks, and depending on when production starts and how the ports behave, an order placed in August or early September could reach the 3PL anywhere from early October to mid December. From there it sells through Black Friday (27 November this year), December, and into January, which can also be a strong demand period for supplements, so use your own channel data when sizing the stock requirement. The platforms pay on their own clocks: Shopify Payments settles to UK accounts in a minimum of three business days with possible bank processing time on top, Amazon runs settlement cycles and delivery based reserves, and TikTok Shop releases funds on delivery based settlement tiers, where qualifying sellers may also have part of their funds held in reserve. None of them pay you on the day the container is funded.
Here is the shape of it on the illustrative numbers: a £300,000 supplier order for a £2m brand. The 30% and 70% payments apply to the supplier invoice. Freight, insurance, duty, clearance and haulage are additional cash flows, and together they determine your final landed cost.
| Stage | When | The cash |
|---|---|---|
| Deposit on order | Month one | £90,000 out (30% of the order) |
| Production (once specs are approved) | Four to six weeks | Nothing moves, the clock runs |
| Balance before shipment | Four to six weeks after the deposit | £210,000 out (the 70%) |
| Freight and customs | 30 to 40 days plus clearance | Additional cash outs that sit inside your landed cost |
| Stock lands, ads ramp | From the arrival month | Campaign spend rises before the stock sells |
| Sell through | November to January | Platform payouts build week by week |
| VAT for a quarter ending 31 December | Early February (one month plus seven days after quarter end) | The net VAT due for the quarter leaves the account |
Add it up and the peak funding need arrives before the peak selling does. On the stated production assumption, the £300,000 of supplier payments leaves in two instalments roughly four to six weeks apart, and the business generates about £100,000 of its own cash over the same window. That leaves about £200,000 to fund for about four months, from the deposit to the point where sell through has refilled the hole. If that pattern feels familiar, we went deeper on the wider version of it in our post on stock versus cash when you're scaling fast.
If your order has not gone in yet, be honest about what sea freight can still do. Thirty to forty days on the water plus customs and delivery means a September order lands somewhere between early November and mid December. You either air freight a wave of your best sellers to cover Black Friday, and air freight normally moves in a week or two, or you accept that the container serves the later part of the quarter and January. What you should not do is fund the sea order in a way that assumes November revenue.
Match the Money to the Life of the Stock
Here is the principle that sorts every decision that follows. Fund an asset with money that lasts about as long as the asset does. Stock that clears in four or five months is short term working capital, and it is self liquidating only when the sell through happens as planned: you buy it, you sell it, the cash comes back and repays the facility. That shape points to facilities measured in months, not years.
It also tells you what to avoid. Equity is permanent capital, and a seasonal stock build is usually a poor fit for it. If you sell 5% of the company to fund a quarter of stock, you have rented a warehouse with the deeds to the building, and the dilution is still there long after the stock has gone. Longer debt deserves a fairer look than most people give it, but compare it properly: a five year term loan can outlast a single seasonal stock cycle, so weigh its repayment profile and early repayment terms against a shorter facility or a revolving line. And the opposite mistake is just as common. Funding slow selling stock with 30 day money creates a refinancing scramble every few weeks, which is how brands end up stacking products and paying two sets of charges for the same problem.
The test for any quote is one line. What does this money cost in pounds, over the four months I actually need it, and does the stock earn that back comfortably? A facility priced at 6% on £200,000 for four months costs about £4,000. The same amount from a 10% flat fee provider costs £20,000. Both get you the stock. Only one leaves your margin alone.
The Funding Ladder
Work down this list until you have the money. These routes are ordered as a practical starting point, not a guaranteed price ranking, because the ranges overlap. Like for like total cost quotes are the only way to compare them honestly.
1. Your supplier first (no explicit finance charge when the price holds)
The 30/70 split is a starting position, not a law. If you have paid for a few orders on time, you have negotiating ground: ask for the 70% against the bill of lading rather than before shipment, ask for 30 days after that, or ask for a lower deposit on a repeat line. Supplier terms can carry no explicit finance charge if the purchase price and discounts stay unchanged, and later payment is the cheapest credit in the room when that holds. Confirm the extra time is not being paid for somewhere else though, because a higher unit price is interest by another name. The other free move is bringing the cash in earlier. Presales, bundle drops and subscription prepayments all pull revenue forward, though remember those payments are liabilities until you deliver, so keep them visible in your numbers. What belongs in the cost of the stock itself is covered in our post on the landed cost model for a supplement brand importing from China.
2. Invoice finance, if you sell wholesale (discount charge about £3,700 to £5,500, service fees on top)
Invoice finance advances money against invoices you have raised, typically up to 90% of the value, often within 24 hours once the facility is live and the invoice is eligible. There are two cost parts, and current UK market guides are consistent on the shape of both. A service charge, usually 0.5% to 3% of your invoiced turnover, depending on how much credit control the lender does. And a discount charge, interest on what you have drawn, typically 1.75% to 4.5% above Bank Rate.
Bank Rate is 3.75%, held at the last decision on 30 July, with the next decision due on 17 September, so the discount charge on a new facility runs about 5.5% to 8.25% a year on the drawn balance. That is not the all in cost, because the service charge and other fees sit on top, and the full figure cannot be worked out without your eligible invoiced turnover, minimum charges and the rest of the terms. On a constant £200,000 balance, the discount charge alone is about £3,700 to £5,500 over four months.
The catch is in the name. It factors B2B invoices. If all your revenue comes through your own store and TikTok Shop, there are no invoices for a factor to advance against, and this rung is closed to you. If you have a wholesale or stockist arm, it fits, and it is one of the cheaper ways to fund the gap between shipping a stockist their order and getting paid. Selective versions are priced as a flat charge per funded invoice, and current market guides indicate roughly 1.5% to 4%, though pricing and commitment terms vary by provider. Watch the small print too: minimum monthly charges, audit fees, CHAPS transfer fees and notice periods can all appear in the terms, so ask for the total cost illustration before you sign anything.
3. Bank facilities, the cheapest proper money if you qualify (about £4,600 to £9,900 before fees)
A revolving credit facility or a short term loan is the traditional answer, and on price it usually wins. Funding Circle currently advertises unsecured term loans from around 6.9%, and the wider unsecured market runs into the teens and beyond. Published high street representative APRs around 8.6% to 14.9% generally relate to much smaller loans, often £25,000 or less, so treat them as context rather than a quote: a £200,000 facility gets priced individually. A variable rate facility is quoted as Bank Rate plus a margin, so at 3.75% base you can build your own scenario. Fees vary by product, from arrangement fees of around 1% to 2% on some overdrafts to no arrangement fee at all on some term loans.
What you pay in patience depends on the route. A bespoke bank facility can take weeks, while some online SME products advertise decisions within hours or 24 hours. Either way, do not rely on a near term approval until it is documented and available to draw, because no amount of application speed fixes a facility you cannot use on the day the deposit is due. The interest is normally deductible against corporation tax, though any tax benefit depends on having taxable profits that can use it.
4. Stock finance, borrowing against the pallets (pricing is bespoke)
Stock finance does what it says: it lends against your inventory, with specialist lenders typically advancing 50% to 70% of eligible stock at cost, which suits D2C brands with no invoices to factor. On £300,000 of fully eligible stock, that advance band funds £150,000 to £210,000, so if you need the full £200,000 you are looking at a top of the range advance rate or a second source on the side. Pricing is bespoke and can include interest, facility charges, valuation costs and stock audit fees, so ask for the total four month cost in pounds rather than trusting a generic range.
This rung lives or dies on your stock records. Lenders want to see sell through rates, where the stock is held, and inventory reporting that updates more often than the annual stock count. Weak or infrequent stock reporting can reduce lender appetite, restrict how much of your stock they will lend against, or worsen the terms offered, so fix it before you apply.
5. Revenue based finance, the fast one (£10,000 to £20,000 on £200,000)
Revenue based finance is the rung people reach for when the deposit is due next week. You connect your sales data, the lender advances money, and you repay it as a slice of daily revenue, commonly around 10% of daily sales in the well known provider examples. The headline is a flat fee, typically 5% to 10% of the advance. Wayflyer states exactly that range in its own help centre, and says the actual number is set by underwriting.
Now convert it. A quick comparison measure is the simple annualised fee equivalent: the fee percentage times 12, divided by the repayment months. An 8% fee repaid over three months works out at roughly 32%. Over six months it is about 16%. This is not APR, and a proper amortisation adjusted APR usually comes out higher, because the balance falls as you repay. Across selected provider examples, the simple annualised equivalent can fall anywhere around 15% to 50% depending on the fee and the repayment period. And early repayment does not reduce the fee, so paying faster changes the annualised maths, not the pounds you owe.
When does it make sense? When the money funds stock that turns fast, and your own numbers show it selling inside the repayment window. When is it dangerous? When a sell through is slow, because the remittance keeps taking roughly a tenth of what you sell until the advance is cleared, and a weak month stretches the repayment timeline, so the speed you paid for turns into a longer, more expensive haul. Stack two advances at 10% each and a fifth of daily sales is committed; some providers instead blend multiple advances, so check the combined remittance in any offer before you agree.
6. Equity, the poor fit for a seasonal buy
Equity is permanent capital, and a single seasonal stock build is usually a poor fit for it. There is one honest case here: when the gap is structural, meaning every extra £1m of revenue permanently needs another chunk of stock, and the business is growing faster than profits can fund the widening gap. That belongs in a wider growth capital raise with a plan behind it. A seasonal buy is different: equity creates permanent dilution, and it is still there long after the stock has gone.
What £200,000 for Four Months Actually Costs
All illustrative example figures, so you can see the spread in one place.
| Route | Typical cost now | On £200,000 for four months | The catch |
|---|---|---|---|
| Extended supplier terms | No explicit finance charge if the price holds | £0 | Confirm the extra time is not being paid for elsewhere |
| Invoice finance | Discount charge 5.5% to 8.25% a year on drawn funds, service charge on top | Discount charge about £3,700 to £5,500 plus service fees | Needs B2B invoices, so wholesale arm only |
| Bank facility | Roughly 7% to 15% a year | About £4,600 to £9,900 before fees | Slower to arrange, wants clean accounts |
| Stock finance | Bespoke, ask for the total cost in pounds | Depends on advance rate and stock eligibility | Advances 50% to 70% of eligible stock at cost |
| Revenue based finance | 5% to 10% flat fee | £10,000 to £20,000 | Simple annualised equivalent around 15% to 50%, skimmed from daily sales |
| Equity | Permanent dilution | Poor fit for a temporary need | Only makes sense inside a wider growth raise |
Read the table with one habit: ask every lender for the total cost in pounds over the full period you need the money, fees included. If a provider will not put that in writing, that is your answer.
Two Customs Levers That Buy You Time
Before you sign any facility, check these two. PVA needs no HMRC approval at all. A duty deferment account may need a financial guarantee, and the guarantee itself can carry a charge unless a waiver applies.
Postponed VAT accounting. If you import, postponed VAT accounting lets you declare and recover import VAT on the same VAT return, instead of paying it at the border and reclaiming it months later. Import VAT is charged on the customs value plus duty and relevant incidental costs, so the import VAT value can be higher than the supplier invoice. On a £300,000 import VAT value, the VAT is £60,000. For a fully taxable business that can recover all of it, PVA avoids the upfront payment entirely: the VAT and the recovery go on the same return. No approval is needed, but you do need to tell your customs agent in writing that you want PVA, and you will need your EORI number on the paperwork. Check your monthly postponed import VAT statements so every consignment is covered.
A duty deferment account. A duty deferment account lets you pay import duty, and import VAT if you are not using PVA, on the 16th of the following month, which HMRC describes as an average of 30 days of credit. Your deferment limit, and any guarantee required if you do not have a full waiver, has to cover your peak months, so size it for Q4 rather than the January run rate.
The VAT calendar itself. The VAT due on a quarter ending 31 December is not payable until early February, one month and seven days after the quarter ends. It was never your money, but it is a date, and it should be sitting in your cash flow in pen. Same for the next stock order. For China made stock that needs to be on the shelf early in the first quarter, plan the order and deposit before the factories wind down for Chinese New Year on 6 February, and confirm your supplier's actual production and payment cutoffs, because another cheque tends to land in the same crunch.
Three Mistakes That Turn Q4 Into a Bad Quarter
Stacking facilities. A revenue based advance on top of invoice finance on top of an overdraft feels like flexibility and behaves like a treadmill. The repayment schedule starts deciding your runway rather than you. One facility, the right length, paid down in the order you took it on.
Funding stock that is not selling. The classic mistake: using fast money to make a slow stock problem bigger. Finance the buy that has selling evidence behind it, like trailing sell through, presale data or a creative that has already worked. If the stock only moves at a discount, the discount is part of the funding cost, and no facility fixes that.
Using the wrong length. Fast money on slow stock means refinancing under pressure. A longer facility is not automatically wasteful, but its cost depends on the drawn balance, early repayment terms, facility fees and whether it supports repeated stock cycles. If it does not line up with how your stock actually turns, the length is wrong, and you will feel it.
What to Do in the Next Two Weeks
- Build a 13 week cash flow with the stock build wired into it: both supplier payments, the arrival date, the sell through curve and the VAT bill. Our guide to cash flow forecasting for fast growing DTC brands walks through the format
- Put the ask to your supplier before you put it to a lender. Later balance, lower deposit, or both
- Get one quote from each rung you can access, and convert every one of them to pounds over the four months, fees included
- Stress test at 70% of plan. If sales come in 30% light, do you still clear the repayments without touching VAT money?
- Sort the records before the applications. Lenders price mess, so get the stock report, the platform reconciliation and the management accounts tidy first
- Lock the customs timing: PVA instruction in writing, deferment limit and any guarantee sized for the peak
FAQ
How should a UK supplement brand fund a Q4 stock build?
Match the money to the life of the stock. Start with your supplier, because later payment terms are the cheapest credit in the room when they do not change the price. Then work down the ladder: invoice finance if you have wholesale invoices, a bank facility arranged in good time, stock finance for inventory, and revenue based finance only when you need speed and can carry the cost. On the illustrative numbers, headline interest or flat fees on £200,000 for four months run from about £3,700 to £20,000, and invoice, bank and stock facilities can add service, arrangement, valuation, audit or transfer fees on top, so compare the quote specific total cash cost.
Is revenue based finance a good way to fund inventory?
It is fast and it is popular for Q4 exactly because of that, but convert the fee before you decide. Wayflyer's stated fee range is 5% to 10% of the advance, and across selected provider examples the simple annualised fee equivalent falls around 15% to 50% depending on the fee and the repayment period. That is not APR, and a proper amortisation adjusted APR will usually be higher. It works when the stock turns in weeks and you have stress tested the repayments. It hurts when sell through is slow, because a fixed slice of daily sales keeps going out until the advance clears.
Do we need approval for postponed VAT accounting, and what does it save?
No approval is needed. You tell your customs agent in writing that you want PVA and give them your EORI number, then declare and recover import VAT on the same return. If the import VAT value is £300,000 and the business can recover all its input VAT, PVA avoids an upfront £60,000 cash payment at import. It is a timing benefit, not a reduction in the VAT liability.
The Bottom Line
Funding a Q4 stock build is a matching problem. A four month asset wants money that ends when the stock does, and the ladder has a free rung at the top: your supplier. Below that, invoice finance, bank facilities and stock finance are all defensible at the right moment, and revenue based finance is the price of speed, with the annualised equivalent converting to a real number once you do the arithmetic. Equity belongs in permanent gaps and wider raises, not in a single seasonal buy. Get the length right, convert every quote to pounds over the full period, and use the customs timing you already have. Then the buy does what it was supposed to do: pay for itself and leave the margin behind.
If you want us to look at your Q4 funding plan before you sign anything, that is exactly the kind of work we do for UK supplement brands between £1m and £20m. We are specialist social commerce accountants, we look at stock cycles and cash flow every week, and we will tell you plainly which rung fits. Book a call and we will go through it with you.