You won the contract with Coles. Or Bunnings. Or Woolies, Kmart, Metcash, Aldi. Whichever big retailer it was, the day the purchase order landed in your inbox you allowed yourself a small fist pump. This was the breakthrough you had been working towards for years.
Six months later, the work is going gangbusters. Sales volumes are strong, the stock is moving, the buyer is happy. But you are quietly burning cash. Your overseas supplier wants paying in 30 days. Your warehouse, your freight, your packaging, your wages, your GST, all due like clockwork. And the big retailer that holds 40 per cent of your revenue is still on the original 60-day terms, which somehow keep stretching to 75 in practice.
Welcome to the brutal arithmetic of wholesale and distribution in Australia. The game looks like getting onto the shelf. The reality is funding the gap between paying for stock and getting paid for it. Most wholesale businesses do not fail because they cannot sell. They fail because they cannot fund the working capital sandwich.
Why Wholesale and Distribution Is the Hardest Cash Flow Game in Australia
Almost every other B2B industry has one slow-paying customer at the end of the chain. Wholesale and distribution has slow-paying customers and demanding suppliers at the start of the chain, often offshore, often in different currencies, almost always wanting their money before yours arrives.
The maths is unforgiving. Imagine you are a homewares importer. You order $400,000 worth of stock from a supplier in Vietnam. Letter of credit terms or 30-day net from shipment. The container takes six weeks to arrive. You then have to clear customs, pay GST on import, freight to your warehouse, pick and pack, deliver to retailer DCs, and finally raise the invoice. By the time the retailer’s 60-day clock even starts, you have been carrying the stock for 10 to 12 weeks. Add the 60 days (which the data says will actually be 64 to 75 in practice) and you are looking at 17 to 20 weeks between paying your supplier and getting paid by your customer.
That is your funding gap. And it gets bigger every time you grow.
The Real State of Trading on Terms with Big Retailers
This is not a feeling. The numbers are public. Australia’s Payment Times Reporting Scheme requires all businesses turning over $100 million or more to publicly report how quickly they pay small business suppliers. The latest data is sobering.
The Regulator’s January 2026 update found that the average time to pay 95 per cent of small business invoices has worsened from 58 days to 64 days. Industry-wide, only 66.5 per cent of small business invoices are paid on time. The slowest payers are paying even slower than they did last year, despite a federal regulatory regime designed to push the other way.
The protections that do exist are recent and partial. The mandatory Food and Grocery Code of Conduct only became fully enforceable for Aldi, Coles, Metcash and Woolworths from 1 April 2025, with full grocery supply agreement compliance required by April 2026. The Code bans retrospective unilateral variations, introduces good faith obligations, and creates code mediator and arbitration pathways. Penalties for breaches can reach $10 million, three times the benefit gained from the breach, or 10 per cent of annual turnover, whichever is highest.
But here is the catch. The Code applies to grocery products only. It does not cover hardware, homewares, apparel, electronics, or general merchandise sold into Bunnings, Kmart, Big W, Officeworks or anywhere else. If you supply non-grocery, you have the Australian Consumer Law and the unfair contract terms regime, but no industry-specific Code on your side. And even where the Code applies, suppliers report being asked to sign new agreements without amendment, with retailers indicating that silence or accepting a purchase order will be treated as acceptance.
The power imbalance has not gone away. It has just gained a few more guardrails.
The 5 Cash Flow Pressure Points Every Wholesaler Knows
If you run a wholesale and distribution business in Australia, you have lived all of these. Naming them is the first step to fixing them. Each one stems from a mismatch between your supplier payment terms and your customer payment terms.
1. Supplier Deposits and Letters of Credit
If you import, your overseas suppliers often want 30 per cent upfront and the balance on shipment, before the goods even leave the port. That cash goes out months before any retailer sees the stock. Many Aussie importers run on letters of credit, which lock up bank capacity in the meantime, reducing what is available for everything else.
2. The GST and Customs Hit on Import
The ATO wants its 10 per cent GST on the customs value plus duty, freight and insurance, payable at the time the goods clear customs. For a $400,000 container, that is a $40,000-plus cash outlay before a single unit hits a shelf. There is a Deferred GST Scheme that helps if you qualify (you can read about it on the ATO website) but plenty of small importers do not, or have not applied. The cash flow impact is real.
3. The Working Capital Tax of Growth
Win a bigger order from a major retailer and you need to fund a bigger inventory build. Open a second SKU range and you need to fund double the stock. In wholesale, growth costs cash before it earns cash. This is the part most wholesale founders get wrong on the way up. They confuse top-line sales growth with cash flow improvement, and then wonder why the bigger they get, the tighter cash gets.
Manufacturers face the same dynamic but with three distinct funding gaps stacked on top of each other (raw materials, work in progress, and finished goods receivables). Our deep dive on manufacturing cash flow walks through the production-line version of this problem.
4. Trading Terms That Get Worse, Not Better
Big retailers will often start you on what they call standard trading terms, with payment 30 to 60 days from end of month. Read that carefully. End of month, not invoice date. An invoice raised on 2 April under EOM 60 terms is not due until end of June, almost 90 days later. Some retailers will then push for longer terms at annual reviews, particularly if they have other suppliers willing to undercut. You can negotiate. But the leverage rarely sits with the smaller party.
5. Promotional and Listing Fee Surprises
Co-op marketing contributions, listing fees, scan rebates, slotting allowances, deductions for damaged stock, returns, end-of-line markdowns. These appear as deductions on remittance, often without the detail you would expect, and they erode the cash you thought was coming. Even when each line is legitimate, the cumulative effect on margin and cash can be significant. The new mandatory Food and Grocery Code now requires retailers to clearly identify circumstances under which they can require payments or set off invoices, which is an improvement, but the mechanism still costs you cash.
How Smart Wholesalers Survive Trading on Terms
The wholesalers who not only survive but thrive on big retailer relationships have a specific operational model. They treat working capital with the same discipline they treat margin. Here is what that looks like in practice.
Get the DSO Number on the Boardroom Wall
Days Sales Outstanding is the single most important number in wholesale. It is the average time between raising an invoice and getting paid. A healthy wholesale DSO sits in the 40 to 50 day range when you are dealing with major retailers on 60-day terms. If yours is creeping past 60, you have a collections issue or a customer mix problem, and either way it needs management attention.
Calculate it monthly. Track it by customer. Compare your largest customers’ actual payment behaviour against their stated terms using the Payment Times Reports Register. The Register is free, public, and gives you the ammunition to walk into a buyer review with hard data instead of a feeling.
Match Your Funding Tools to Your Cash Flow Shape
Wholesale and distribution is the textbook case for stacking finance products. One product rarely solves the whole problem.
Invoice finance is the workhorse for the back end of the cycle. A specialist lender advances 80 to 90 per cent of your invoice value within 24 to 48 hours of you raising it. When the retailer eventually pays, the lender takes their cut and a fee, and you get the rest. The advance turns a 60 to 75-day collection cycle into a 1 to 2-day cycle for cash flow purposes. For wholesalers selling into a small number of large, creditworthy retailers, invoice finance is almost purpose-built. Lenders price the risk based on who is paying, not who is invoicing, which is exactly the right way around. Our existing piece on the top reasons to use invoice finance covers the use cases in more detail.
A business line of credit covers the more general working capital ebbs and flows. Stock builds before peak season. Late freight bills. The GST hit on a big import landing in the same week as wages. The line of credit gives you headroom to ride out the lumps without panicking. You only pay interest on what you use, which is the key feature for businesses with seasonal patterns. Our blog post on the smart reasons a business line of credit fuels growth dives deeper into the product.
For a side-by-side breakdown of these tools and where business overdrafts fit in, our piece on invoice finance vs line of credit vs overdraft walks through the seven critical differences and how to match each to your specific cash flow gap.
For purchasing stock specifically, secured business loans or trade finance facilities can fund the purchase order and supplier payment, secured against the inventory itself. Trade finance is a niche product but it is exactly the right tool for importers funding offshore suppliers ahead of arrival.
Negotiate the Terms That Can Be Negotiated
Not every clause in a grocery supply agreement or trading terms document is set in stone. The mandatory Food and Grocery Code now expressly states that suppliers can request to negotiate at any time, and that any agreed variation must be in writing. Lean into that. Try for invoice-date terms instead of EOM. Try for shorter terms on premium products where you have real category leverage. Try for early-payment discounts (a 2 per cent discount for 7-day payment can be cheaper than your invoice finance fee). Some of these will land. Some will not. None of them land if you do not ask.
Tighten the Front End of the Process
Wholesalers routinely lose 5 to 10 days of DSO at the front end of the process, simply because invoicing is slow or sloppy. Invoices are raised at month-end instead of on dispatch. Purchase order numbers are missing. Delivery dockets do not match. Each error gives the retailer’s accounts payable team a legitimate reason to put the invoice in the dispute pile, where it will sit for weeks.
Set up your systems so invoices fire automatically the moment a delivery is confirmed. Make sure your data matches the retailer’s EDI requirements exactly. The big four retailers all run different EDI standards and document templates. Get this right once and you remove a chunk of avoidable lateness forever.
Diversify Customer Concentration Risk
If a single retailer represents more than 35 per cent of your revenue, you have a concentration risk that lenders will price into your funding. They are not being unfair. They are pricing reality. If that retailer cuts your range or extends your terms, your business model breaks. Building a smaller second customer (independents, hospitality, online D2C, export) reduces concentration and improves your bargaining power with the big retailer at the same time.
A Working Example: The $2 Million Wholesaler
Let’s run the numbers on a typical Aussie wholesale business doing $2 million a year in revenue, supplying mostly into one major retailer on 60-day EOM terms.
At any given moment, you are sitting on roughly $400,000 to $500,000 in receivables. Stock on hand might be another $300,000. Your supplier needs $50,000 to $80,000 a month in payments to keep the next container rolling. Wages, rent, freight and GST chew through another $80,000 a month easily.
If the retailer extends payment by even 10 days across the year, you have effectively lost $55,000 to $80,000 of working capital you used to have. You did not get less profitable. You got less liquid. And the response cannot be “stop selling to that retailer”, because they are 40 per cent of revenue. The response has to be funding tools that absorb the timing without bleeding the business dry.
This dynamic is even more acute for industries with daily or weekly cash burn. Transport operators serving these same major retailers feel it through fuel and driver wages, while labour hire agencies feel it through weekly payroll. Our pieces on transport cash flow and labour hire cash flow cover those parallel industries in detail.
This is the case for invoice finance more clearly than just about any other industry. The Reserve Bank’s October 2025 Small Business Finance Bulletin noted that non-bank SME lending has grown strongly since 2022, with specialist lenders increasingly competing for exactly these working capital scenarios.
Quick Action Checklist for Wholesale and Distribution Operators
- Calculate your DSO this week. Track it monthly. Set a target.
- Pull your top three retailers’ records from the Payment Times Reports Register. Know what you are walking into.
- Audit your invoicing process. How many days between dispatch and invoice raised? Aim for same-day.
- Check whether you qualify for the ATO’s Deferred GST Scheme if you import.
- Review your trading terms documents this quarter. Note every clause that is open to negotiation.
- Map your full cash conversion cycle from supplier deposit through to retailer payment. The number will surprise you.
- Talk to a finance specialist about whether invoice finance, a line of credit, or trade finance fit your specific shape. Stacking is normal in wholesale.
What If You’re Already Stretched?
If you are reading this in arrears (suppliers nervous, ATO behind, stock build for peak season looming and no obvious way to fund it) the worst thing you can do is keep buying stock on hope. Stop, calculate the real funding gap, and look for finance options that match the shape of the gap. Borrowing under pressure has real risks, so it is worth reading our Warning About Borrowing page first.
If a major bank has recently declined a working capital application, that decline does not mean your business is unfundable. Two out of three SME loan applications under $1 million are turned down by Australian banks every year. Our piece on what to do when the bank says no walks through the seven smart plays that work in 2026.
Even if your trading position is bruised, options still exist. Bad credit business loans exist for exactly this situation, and many specialist non-bank lenders look more at the strength of your debtor book than at historical credit blemishes. If your big retailer customer is solid, that fact carries weight in the application.
If you are in dispute with a retailer (not just slow payment, but contractual issues) the Australian Small Business and Family Enterprise Ombudsman provides free dispute support. For grocery specifically, you can also raise a confidential complaint with the relevant supermarket’s Code Mediator under the Food and Grocery Code. These are free resources that exist precisely because the imbalance is real and recognised at federal level.
Final Thoughts
Wholesale and distribution is one of the toughest cash flow disciplines in Australian business. You are buying ahead of demand, selling on terms, paying offshore suppliers in full while collecting from local customers in dribs and drabs. The retailers know this. They price it into their negotiations. The lenders know it too, which is why a whole category of finance products exists specifically for your situation.
The wholesalers who win are not the ones who avoid the cash flow squeeze. The squeeze is structural. The winners are the ones who treat working capital as a capability, fund it deliberately, track DSO like a hawk, and use the right tool for the right gap. Invoice finance for receivables. Lines of credit for ongoing flex. Trade finance for stock builds. Each playing its part.
If you have been wearing the wholesale cash flow pain personally (running the credit card hot, missing super payments, lying awake before payroll lands) the issue is almost never the business. It is the funding stack. The good news is that fixing the funding stack is one of the cleanest, fastest improvements a wholesale and distribution operator can make. For more on the broader context, our pillar piece on business cash flow problems in Australia walks through the framework in detail.
At Get A Loan, our role is to match wholesale and distribution businesses with the lender and product that actually fits the situation. You do the work. We help you fund the gap.
Disclaimer
The information in this article is general in nature and does not take into account your objectives, financial situation or needs. It is not personal advice, tax advice, legal advice or a recommendation to apply for any product. Before acting on any information, you should consider whether it is appropriate for your circumstances and seek independent financial, legal and tax advice where appropriate.
Get A Loan Finance Pty Ltd is not a lender. We work with a panel of lenders and finance providers. Product features, eligibility criteria and availability can change without notice.
