Where the money sits between the deposit and the sale

The sequence of outflows before anything is sold

Sampling and testing come first, then artwork and print origination, then a deposit securing the production slot. The balance falls due on completion, typically before the goods have left the supplier's country. International movement, import charges, inbound handling and any inspection follow. Storage then begins and continues for as long as the stock remains. Every one of those is committed spend against an article that has not yet met a customer. Laying the sequence out on a calendar, rather than as a single landed cost, is what reveals how long the money is unavailable.

Growth consumes cash faster than it generates it

A line that sells well demands a larger reorder, placed before the previous run has fully converted into receipts, and funded from a balance that has not yet recovered from the last one. The business is profitable on paper and short of money in the bank, which is the classic pattern behind the failure of expanding product companies. It is not a sign that the model is wrong; it is arithmetic. What matters is recognising it early enough to arrange funding deliberately rather than discovering it when a deposit is due and the account will not cover it.

Channel terms decide when money comes back

A direct sale collects at the point of purchase, less processing charges. A marketplace holds funds and pays on its own cycle, sometimes withholding a reserve against returns. A distributor pays on terms after delivery. A retailer pays on terms that are typically longer still, and may deduct promotional and other charges before settling. Moving into larger channels therefore lengthens the cycle at exactly the moment order sizes increase, so a supplier can win the account it wanted and immediately be less able to fund the stock it now needs.

Funding the gap, and what each source really costs

Supplier terms are the least costly relief where a manufacturer will grant them, and they usually require a history. Invoice finance advances against trade receivables and suits wholesale and retail supply rather than direct selling. Inventory or purchase-order finance addresses the deposit and balance directly, at a price reflecting the exposure. Revenue-linked facilities repay from sales and can be expensive when sales slow. Equity is the most costly form of money and the only one that does not demand repayment. The dangerous move is funding stock that is not selling, because interest accrues while the reason for the borrowing decays.

Managing the cycle rather than admiring the margin

Track the elapsed period from the first payment against a production order to the receipt of cash from the last unit it produced, and watch how that period changes as channels and order sizes change. Maintain a cash forecast keyed to production milestones rather than to accounting periods, so a deposit and a freight invoice appear where they actually fall. Then set a rule for when not to reorder: a rate of sale, a stock cover level or a bank balance below which the next commitment waits, agreed while the decision is still hypothetical.

Frequently asked questions

Why am I profitable on paper and short of cash?

Because profit is recognised when a unit sells and cash left when the unit was made, shipped and stored. Each reorder pulls money forward again, and a growing line reorders sooner and larger. Add channel payment cycles and the money spends most of its life as stock rather than as a balance. This is normal for an inventory business, and the remedy is planning rather than alarm: forecast cash against production milestones and arrange funding before a deposit becomes urgent.

Can I ask the factory for payment terms?

You can, and early on the answer is usually no, because an unproven overseas customer represents an exposure the supplier cannot assess or easily pursue. Terms tend to be earned through a record of orders paid promptly, and often begin as a reduced deposit rather than credit after delivery. Payment structure is negotiable in other ways too: linking part of the balance to a satisfactory inspection result protects you and costs the supplier nothing if the run is right.

How do own-brand sellers usually fund a reorder?

Most fund early reorders from the proceeds of the previous run, which is why the second and third orders are the tightest. Beyond that the common routes are supplier terms once a record exists, facilities secured against inventory or purchase orders, receivables finance where the sales are to trade customers, and equity. Whichever is used, apply the same discipline: fund stock that has demonstrated a rate of sale, and decline to borrow against a forecast the first run did not support.