Recognition
Duty owed before goods clear, suppliers paid before customers do
You've paid, or you're about to pay, someone other than your own customer, and there's no invoice of yours behind that cost yet.
Why it happens
The money moves before the goods do
HMRC wants duty paid before goods clear. Suppliers, especially overseas ones, often want paying before they ship. Neither of those events waits for your own customer to pay you, which creates a genuine, structural cash gap that has nothing to do with the underlying business being weak.
Where this fits
A sector-specific challenge, and its own facility family
This sits closest to freight forwarding and importer businesses specifically. See Freight Forwarding for the fuller sector picture, and trade and import working capital for where the cash sticks stage by stage. It's distinct from invoice finance because there's often no customer invoice yet to advance against.
Specialist insight
Most importers don't need a guarantee any more. Some still do
Since January 2021, HMRC has waived the guarantee requirement for most UK-established businesses using a duty deferment account in Great Britain (see gov.uk guidance on duty deferment guarantee waivers, which also covers the Northern Ireland exception). See duty deferment guarantees for exactly who still needs one.
One thing we've noticed: importers often ask for "trade finance" when the actual gap is narrower (just the duty, or just the supplier deposit) rather than the whole transaction. Financing the specific gap tends to be cheaper and quicker to arrange than a broader facility sized for the whole trade cycle.
Decision helper
What typically fits
Long, multi-party supplier chains are the clearest version of this: you've paid a manufacturer or supplier well before you've sold anything on, sometimes through two or three intermediaries. If that's your situation, describing it plainly to us works better than hunting for a named product, because the right answer depends heavily on your particular chain.
Alternatives and limitations
Importers who don't clear HMRC's GB guarantee waiver test still need a real guarantee, and Northern Ireland deferment accounts need one regardless of the GB waiver. Once goods have cleared and a genuine customer invoice exists, this stops being the right page: see Invoice Finance.
