Buying stock without property: funding inventory on your turnover

Why does stock need funding at all?

Because it has to be paid for before it’s sold. A retailer ordering for Christmas pays suppliers in September or October. An online store buying a bulk shipment pays before the container lands. A wholesaler supplying a new customer buys the product before the first invoice is paid. Between paying and being paid, the cash is sitting on shelves.

For a profitable business, that gap is temporary. For a business without property, unsecured funding sized on turnover is usually the simplest way to bridge it.

Which funding fits which kind of stock purchase?

Stock situation	Good fit	Why
Seasonal build (Christmas, EOFY sales, summer)	Short loan or line of credit	Clear start and end; repay after the peak
Ongoing restocking with irregular timing	Line of credit	Draw each order, repay as it sells
Card-heavy retail with seasonal swings	Merchant cash advance	Repayments move with takings
Supplying a new wholesale customer on terms	Invoice finance or line of credit	Funds the gap until they pay
Bulk-buy discount from a supplier	Short loan	Discount may outweigh the cost of funding

The golden rule: the funding term should roughly match the time it takes the stock to become cash. A three-month stock cycle funded by a two-year loan means paying for money long after it’s done its job.

What will a lender want to see?

• Evidence of demand. Last year’s sales for the same period, confirmed orders, or a customer contract.
• Your normal stock turn. How quickly does stock usually sell?
• Supplier quotes or pro-forma invoices. A specific figure for a specific order.
• Business bank statements showing turnover and existing commitments.
• Margin. Enough gross margin that selling the stock covers the cost of funding comfortably.

Online sellers and home-based businesses should also have platform reports ready. Our page for home-based and online businesses explains how lenders read marketplace payouts.

How do you avoid overstocking with borrowed money?

business.gov.au’s cash-flow guidance suggests reducing costs by making sure stock levels aren’t too high and, where possible, ordering when customers order. Funded stock sharpens that advice, because every unsold unit carries a finance cost.

1. Base quantities on last year’s sell-through, adjusted for known changes.
2. Split orders where suppliers allow, so the second tranche depends on how the first sells.
3. Keep a clearance plan for leftovers before the season ends.
4. Don’t fund slow-moving lines. Focus borrowed money on proven sellers.

If you’re planning a stock purchase, send us a quick enquiry with the amount and timing, and we’ll suggest a structure.

When is a bulk-buy discount worth borrowing for?

When the saving is bigger than the cost of funding over the time you’ll hold the stock. A supplier offering a meaningful discount for ordering double or paying upfront can make funding pay for itself, if the extra stock sells within a sensible time. It isn’t worth it if the extra stock will sit for months or if storage costs rise.

We don’t publish rates, but we’ll lay out the total cost of funding so you can compare it with the supplier discount directly.

What about GST on stock purchases?

GST-registered businesses generally pay GST on stock purchases and claim it back as a credit on their BAS. The ATO requires registration once GST turnover reaches $75,000. The timing of that credit can help cash flow in the quarter after a big order, which is worth factoring into how long you need funding for. Your accountant can confirm how it applies to you.

A worked example (illustrative)

A surf and swimwear shop in a coastal town turns over about $60,000 a month on average, with most sales between November and February. The owner wants $55,000 in September for summer stock. Last summer, the same order sold through by late January.

A facility repaid over five to six months, with heavier repayments possible in the peak, suits this pattern. A merchant cash advance might also fit, since repayments would rise with summer takings. The worked numbers would come from the shop’s statements; this example is illustrative.

What should your stock funding request include?

A clear request gets a quicker, better answer. When you enquire, have these ready:

• The supplier quote or pro-forma invoice, with delivery timing.
• Last year’s sales for the same period, by month if possible.
• Your usual stock turn: how many weeks a typical order takes to sell.
• Your gross margin on the lines you’re buying.
• Your repayment plan: when you expect the stock to become cash, and whether repayments can be heavier in peak months.

With those five items, a specialist can suggest a structure matched to your sell-through rather than a generic term. It also helps you sense-check the order before you commit. If last year’s peak doesn’t support the quantity you’re planning, it’s better to learn that now than in February with shelves still full.

Stock the shelves without staking the house

Good stock decisions shouldn’t depend on owning property. Tell us what you’re buying and when it sells. Nobody runs a credit check when you first enquire, your details stay with us instead of being sprayed to lenders, and a real person helps you match the funding to your sell-through.

Please give accurate turnover and stock order details on the form. Sell-through timing is what shapes the right repayment plan. See if you qualify.