Declined by Octet? When trade or debtor finance won't cover the supplier

Importers and wholesalers face a timing problem most businesses never see. The supplier in Shenzhen, Milan or Ho Chi Minh City wants paying before the container leaves. The goods take weeks to arrive, more weeks to clear and sell, and your own customers then take 30 to 60 days to pay. If Octet declined your trade or debtor finance, or the facility won’t stretch to this order, here’s how to keep the shipment moving.

What Octet does

Octet provides trade finance, debtor (invoice) finance and working capital facilities to business-to-business companies. Those products are built around transactions: paying suppliers, funding receivables and smoothing the gap in between. That means a decline often relates to the deal or the debtors, not only to your bank account.

Why trade and debtor finance get declined

These are general features of trade and debtor finance, not an account of how Octet assessed your business.

The supplier. Trade financiers often need to be comfortable with who they’re paying. A new supplier, an unusual payment method or a supplier in certain jurisdictions can be harder to approve.

The goods. Perishable, highly seasonal, fashion-driven or very specialised goods can be harder to fund, because they’re harder to sell if something goes wrong.

The margin. Funders want a buffer between what the goods cost and what they’ll sell for. Thin margins leave little room.

Your debtor book. For debtor finance, the quality and spread of your customers matter. One dominant customer, related-party sales or regular disputes all count against it.

The limit’s already used. If an existing facility is fully drawn against earlier shipments, there may be no room for the next one until they clear.

The next 24 hours

• Ask which part of the deal was the problem. Supplier, goods, margin, debtors or limit? Each needs a different fix.
• Talk to the supplier. A smaller deposit, a split shipment or a short extension may buy time.
• Cost the whole landing. Supplier balance, freight, insurance, customs and GST on import all need covering. The ATO’s BAS pages are a reminder of when that GST comes back around.
• Work out the exit. When does this stock sell, and when do those buyers pay?
• Check the property. Equity in your warehouse, home or an investment property is the key to a quick top-up.

Paying the supplier with property behind you

Our lane is $20,000 to $50,000, secured on a home, an investment property or a commercial building: up to 80% of what a residential property is worth, or 70% for commercial. We skip the valuation and we don’t ask for statements, financials or tax returns. A patchy credit history, defaults or tax arrears won’t automatically rule you out.

Because the loan is secured on property, we don’t assess the supplier, the goods, the margin or your debtors. We look at the property, the equity, what the money is for and how it gets repaid. For an importer, that’s usually simple: pay the supplier now, sell the stock, get paid, repay. Up to three months of interest can be prepaid to cover the time on the water and in the warehouse, then repayments are weekly. Funding can happen in as little as 24 hours once approved, which can be the difference between making a sailing and missing it.

We’re realistic about size. At $20,000 to $50,000, we’re the quick fix for one payment, not a replacement for a full trade facility.

Example: a Brisbane homewares importer

A homewares importer in Brisbane’s south needs to pay a $46,000 balance to a supplier before a container of ceramics and linen is released. Its existing facility is fully drawn against two earlier shipments still selling through, and the request for more room is declined.

The company owns its small warehouse unit with good equity. A $46,000 loan against it pays the balance, the container ships, and sales from the earlier shipments and this one repay the loan within a few months. The supplier and the goods are never assessed. This is an illustration only.

When a trade facility is still the better long-term tool

If you import regularly and in volume, a proper trade or debtor finance facility sized to your cycle is usually the right long-term structure, and a fully drawn limit is a sign it may need resizing. Our invoice finance explainer and manufacturing and wholesale page cover that side. A short property-backed loan is for the shipment that can’t wait.

Make the sailing

If Octet’s answer has put a shipment at risk, send us the details. It takes about a minute, and enquiring leaves your credit report exactly as it was: no check happens unless you decide to proceed. We are the lender, so your details don’t go out to a long list of funders. A real person reads it and calls you. Give us accurate numbers on the property and what’s owed so we can tell you quickly whether we can help. See if you qualify →