How to Finance a Large Supplier Invoice in New Zealand
To finance a large supplier invoice, first ask the supplier to split it or extend the due date, which costs nothing. If that fails, compare the dollar cost of an existing overdraft, a business credit card, a short-term loan, invoice finance on your own customers' invoices, and paying the supplier invoice in instalments. The best option is the one that costs least over the weeks until that stock or job turns back into cash.
First: Is This a Timing Gap or a Bigger Problem?
Financing a supplier invoice makes sense when the money is coming and simply arrives after the due date. Examples are stock that will sell over the next few months, or a job the client will pay for next month. It doesn't fix a business that is losing money, because the repayments land on top of the same shortfall. Before choosing an option, write down two numbers:
- How much you need beyond the cash you can safely spare.
- How long until the purchase earns that money back.
The Options Compared on a $24,000 Invoice
Illustrative figures: a Palmerston North farm supplies retailer has a $24,000 invoice from an NZ distributor for its spring order. The owner can pay about a third now and expects the rest to come in from sales over the next two months. The costs below are for funding the other $16,000 over two months, using example rates. Your lender's actual rates will differ.
| Option | Illustrative cost | What you need | Main catch |
|---|---|---|---|
| Supplier splits the invoice | $0 | A good record with that supplier | They may say no, and you have to ask early |
| Existing overdraft at 13% a year | About $260 in interest | An overdraft with room in it | New overdrafts usually need security, and approval takes time |
| Business credit card at 20% a year | About $400 in interest, plus any card surcharge | A card limit big enough | Limits are often lower than this invoice |
| Short-term unsecured loan | Interest plus an establishment fee, often several hundred dollars or more | An application and trading history | Fixed repayments, sometimes weekly |
| Invoice finance on your own debtors | Fees on each invoice advanced | Unpaid invoices owed by your business customers | No use if most of your customers pay at the counter |
| Supplier invoice instalments (3 payments) | $948 flat (3.95% of $24,000) | Approval on this invoice | Costs more than an existing overdraft, and the first instalment is paid at the start |
The pattern is the honest part. If you already have an overdraft with room in it, it's usually the cheapest borrowed money for a short gap. Instalments suit a business with no overdraft, one that doesn't want to give a bank security, or one that wants to keep its overdraft free for wages and surprises. They also make sense when the alternative is a maxed-out card or paying the supplier late. Instalment fees on business purchases can usually be claimed as a business expense. See is the instalment fee tax deductible.
How Each Option Works
Ask the supplier. Call the credit or accounts team before the due date. Offer a specific plan, such as half on the 20th and half a month later. Suppliers agree far more often for a customer with a clean payment record than for one who has already missed a date. A script is in how to negotiate longer payment terms with suppliers.
Overdraft. This is flexible and cheap per day, but it's priced and secured by your bank. It's best for gaps under a couple of months.
Business credit card. This works if you can clear it within the interest-free period. Check whether the supplier adds a card surcharge, which can cost more than the interest.
Short-term loan. You get a fixed amount over a fixed term. Read the total repayable, not just the rate, because establishment fees matter on small, short loans. See trade credit vs a business loan.
Invoice finance. This only works if you sell to other businesses on credit, because it advances cash against what they owe you. More in trade credit vs invoice finance.
Supplier invoice instalments. A provider pays the supplier the full invoice, and you repay in monthly instalments. The supplier gets paid on time and your account stays clear.
Using PaidTerms for a Supplier Invoice
PaidTerms works on a real invoice from an NZ business supplier. You apply online with the invoice, and we review your business and the purchase. If you're approved, PaidTerms pays your supplier in full and you repay over 3, 6 or 9 months. Fees start from 3.95% for three instalments, and the exact fee for your chosen term is shown before you confirm. You need to be an NZ business, and PaidTerms doesn't pay overseas suppliers.
Not sure it's right? Alternatives to trade credit for NZ business customers compares more options. The Stock Finance guide covers funding by industry.
Frequently Asked Questions
Can I pay a supplier invoice in instalments?
Yes, either by agreeing a payment plan with the supplier or by using a provider that pays the supplier in full while you repay monthly. A supplier plan costs nothing but needs their agreement. A provider charges a fee and approves each invoice.
What is the cheapest way to finance a supplier invoice?
Getting the supplier to split or extend it, because that is free. After that, an overdraft you already have is usually cheapest for a short gap. Compare total dollar cost over the actual weeks you need, including fees.
What is supplier invoice financing?
It is any arrangement where a finance provider pays a supplier invoice for you and you repay the provider later, either in one payment or in instalments. It is different from invoice finance, which advances cash against invoices your own customers owe you.
What should I do if I can't pay a supplier invoice on time?
Contact the supplier before the due date, explain the situation, and offer a specific payment plan in writing. Going quiet is what gets accounts put on stop. Then fund the shortfall in the cheapest way available.
Do I need security to finance a supplier invoice?
It depends on the option. Overdrafts and many business loans ask for security or a director's guarantee. Credit cards and supplier invoice instalments are usually assessed on the business and the purchase instead. Always read what you are signing.
