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Sector

Wholesale and FMCG suppliers

A supplier into a large retailer pays for the stock first, delivers it, and invoices the agreed price. What lands weeks later is often less than that invoice, once promotional contributions, claims and logistics charges agreed in the supply terms have been netted off. The stock was paid for in full; the cash that comes back to repay it isn't.

Tell us what's happening How money moves in this sector

How money moves

Full cost out, invoice value less deductions back

The gap has two parts: the time between paying for stock and the retailer paying, and the difference between the invoice and the remittance. As an illustration, stock invoiced at £100,000 that lands as £92,000 after £8,000 of deductions leaves the supplier repaying its stock funding from £92,000, not £100,000.

StockPaid out

  1. Stock bought or produced for an order or listing
  2. Supplier pays for it
  3. Delivered to the retailer's specification

Retailer paymentIncome

  1. Invoice raised at the agreed price
  2. Paid under the supply agreement's terms
  3. Deductions netted off before the remittance lands

The supplier carries the full cost of the stock until the retailer pays, then recovers the invoice less whatever has been deducted.

For the retailers the Code covers, a retailer must pay for groceries delivered to its specification in line with the supply agreement "and, in any case, within a reasonable time after the date of the Supplier's invoice" (Groceries Supply Code of Practice, paragraph 5). The Code doesn't set a number of days.

Where the sector gets misread

What a generalist lender sees, and what's actually happening

What a generalist lender readsWhat is actually happening

Invoice value as the cash to come

The remittance is the invoice less promotional contributions, claims and logistics charges agreed in the supply terms, so the cash that repays stock funding is lower than the sales ledger says.

A household-name retailer, so the money is as good as banked

The retailer's ability to pay is rarely the question. How much it pays, after deductions, is.

Supermarket supply as protected by regulation

The Code binds only the 14 designated retailers, and doesn't ban deductions: it stops supply agreements including payments for shrinkage, and allows wastage and promotional payments on set conditions. Supply into smaller retailers and wholesalers sits outside it entirely.

The measure that matters

Net remittance, not invoice value

The useful number is what each retailer actually pays against what was invoiced, over enough orders to show a pattern: the typical deduction rate by customer, and how long after invoice the remittance lands. That's what stock funding is really repaid from.

Suppliers who budget off face value tend to be caught out when the remittance arrives lower. Sizing facility headroom against realistic net remittance from the start avoids that.

Where finance fits

Stock funding, sized for what actually comes back

Your situationUsually fitsNot this
Paying a manufacturer or producing stock before it's sold inTrade and import finance for the stock and purchase-order gapInvoice finance, with nothing invoiced yet
The same gap recurs with every order or listingA credit line sized against expected net remittanceA one-off loan sized on a single order's face value
A specific deduction looks like a breach of the CodeA dispute with the retailer, or the Groceries Code Adjudicator if it's a designated retailerTreating a finance facility as the fix
A facility can fund stock ahead of a retailer's order. It can't recover a deduction the retailer has already netted off.

Chasing individual deductions is a commercial or compliance question for the retailer relationship, not a finance one. Where stock already sits in a warehouse with real value, stock and inventory finance is the related question.

Sources

Where these points come from

Talk it through

Need another perspective?

Describe where things stand in a sentence or two: who pays, how, and where the gap sits. We'll tell you whether it's something we can help with. There's no charge for this.

Your enquiry is read by a person at Established Finance, not a call centre or an automated queue. We use it only to work out what's likely to fit and reply to you. We don't share your details with anyone else unless we introduce you to a specialist partner, and only with your agreement at that point. Sending this doesn't appoint anyone or create a professional engagement, and there's no obligation at any stage. See our privacy policy.

What happens next

  1. A person on our team reads it against how businesses in this sector are actually paid.
  2. If we can help, we introduce you to a specialist partner we have vetted and tell you who they are.
  3. No charge and no obligation at any point. You decide whether to go further.
Adam Parker

Adam Parker

Founder of Muswell Rose Consulting Ltd, which trades as Established Finance · former Managing Director of Penny, an invoice finance business, with 15+ years across mortgages, commercial finance and fintech lending.

Last updated:

Practical questions

Before you get in touch

What information do I need?

To start, just a description of what’s actually happening in the business. If it progresses, the specialist partner will ask for the usual things: recent accounts, a sense of turnover and trading history, and details of the specific need.