Stock & Trade Finance Scotland

Funding for Importers & Wholesalers

Introduction

Need to pay suppliers before your customers pay you? Whether you’re importing goods from overseas, stocking inventory for peak season, or fulfilling large orders that tie up cash flow, stock and trade finance bridges the gap between paying suppliers and receiving customer payments.

At Capital 8 Finance, we help importers, wholesalers, manufacturers, and distributors across Scotland and the UK access the working capital they need to purchase inventory, pay suppliers, and fulfill orders – without depleting cash reserves or maxing out overdrafts.

From stock finance secured against existing inventory to trade finance that pays your suppliers directly, we’ll find you the most cost-effective solution from our whole-of-market lender panel.

What Is Stock & Trade Finance?

Stock and trade finance are specialised working capital solutions designed for businesses that buy and sell physical goods. Unlike traditional business loans or invoice finance (which funds invoices after delivery), stock and trade finance provides capital earlier in the transaction cycle – when you need to purchase inventory or pay suppliers.

The problem they solve:

You receive a large order from a customer, but you need to pay your supplier upfront to manufacture or ship the goods. Your customer won’t pay you for 30-90 days after delivery. This creates a cash flow gap that can prevent you from fulfilling profitable orders.

Stock and trade finance fills this gap by providing funding secured against your inventory or confirmed purchase orders, allowing you to pay suppliers, fulfill orders, and maintain cash flow throughout the trading cycle.

Stock Finance Explained

What Is Stock Finance?

Stock finance (also called inventory finance or stock funding) allows you to raise capital against inventory you already own and have stored in your warehouse or premises.

The lender advances you a percentage of your stock value (typically 20-30%), giving you immediate cash to reinvest in the business, pay suppliers, or cover operational costs.

How Stock Finance Works

Valuation– The lender values your existing inventory (finished goods, raw materials, or work-in-progress)
Advance– You receive 20-30% of the stock value as a cash advance
Security– The lender takes security over your inventory
Repayment– As you sell stock and raise invoices, the invoice finance facility (which stock finance is typically linked to) repays the stock finance advance
Revolving facility– As you replenish stock, you can draw additional funding

When Stock Finance Works Best

Ideal for:

Wholesalers and distributors with significant inventory holdings
Manufacturers with raw materials or finished goods in stock
Retailers preparing for seasonal peaks (Christmas, summer, etc.)
Businesses with slow-moving inventory that ties up cash

Typical requirements:

Stock value of at least £1 million (some lenders accept £500k+)
Regular stock turnover (you sell and replenish inventory regularly)
Must be linked to an invoice finance facility
Stock must be stored in a secure, accessible location

Example:

A wholesale distributor holds £2 million of stock in their warehouse. A stock finance lender advances 25% of the stock value (£500,000), which the business uses to purchase additional inventory from suppliers. As the business sells stock and raises invoices, the invoice finance facility repays the stock finance advance. When new stock arrives, the business can draw additional funding.

Trade Finance Explained

What Is Trade Finance?

Trade finance (also called import finance or purchase order finance) provides funding to pay your suppliers before you receive goods, particularly when importing from overseas manufacturers.

Instead of you paying the supplier upfront, the lender pays the supplier directly on your behalf. Once the goods arrive and you deliver them to your customer, you raise an invoice, which triggers your invoice finance facility to repay the trade finance advance.

How Trade Finance Works

Confirmed order– You receive a purchase order from a creditworthy customer
Supplier payment– You need to pay your supplier (often overseas) to manufacture or ship the goods
Lender pays supplier– The trade finance lender pays your supplier directly according to INCO terms (International Commercial Terms)
Goods delivered– The goods arrive, and you deliver them to your customer
Invoice raised– You raise an invoice to your customer
Invoice finance repays trade finance– Your invoice finance facility advances against the invoice, repaying the trade finance facility
Customer pays– When your customer pays (30-90 days later), the invoice finance facility is repaid, and the cycle completes

When Trade Finance Works Best

Ideal for:

Importers purchasing finished goods from overseas suppliers
Businesses fulfilling large orders that require supplier payment upfront
Companies with creditworthy customers (strong buyers improve approval chances)
Businesses with confirmed purchase orders but insufficient cash to pay suppliers

Typical requirements:

Confirmed purchase order from a creditworthy customer
Established relationship with supplier (or reputable supplier)
Must be linked to an invoice finance facility
Goods must be shipped directly to you or your customer

Example:

A UK importer receives a £200,000 order from a major retailer for goods manufactured in China. The Chinese supplier requires payment upfront before shipping. The importer doesn’t have £200,000 in cash. A trade finance lender pays the Chinese supplier directly. The goods are shipped, arrive in the UK, and are delivered to the retailer. The importer raises a £200,000 invoice, and the invoice finance facility advances 85% (£170,000), repaying the trade finance facility. When the retailer pays 60 days later, the invoice finance facility is repaid, and the cycle completes.

Stock Finance vs. Trade Finance: Which Do I Need?

Feature	Stock Finance	Trade Finance
When funding is provided	Against existing inventory	Before goods are purchased/shipped
What it funds	Cash release from stock you already own	Payment to suppliers for goods you’re ordering
Typical advance rate	20-30% of stock value	Up to 100% of supplier payment
Minimum facility size	£500k-£1m stock value	Varies (often £50k+ per transaction)
Best for	Businesses with large inventory holdings	Importers and businesses fulfilling large orders
Requires invoice finance?	Yes, always linked	Yes, always linked
Typical users	Wholesalers, distributors, manufacturers	Importers, retailers, product businesses

Many businesses use both: Stock finance to release cash from existing inventory, and trade finance to fund new supplier payments for incoming orders.

Industries That Benefit from Stock & Trade Finance

Importers & International Traders

If you import finished goods from overseas (China, India, Europe, USA), trade finance allows you to pay suppliers without tying up cash flow. This is particularly valuable when:

Suppliers require payment before shipping (common in Asia)
You’re fulfilling large orders for UK retailers or distributors
Currency fluctuations make cash flow planning difficult

The trade finance providers we work with understand the challenges UK businesses face due to international trade, from INCO terms to shipping delays.

Wholesalers & Distributors

Wholesalers typically hold significant inventory to fulfill customer orders quickly. Stock finance allows you to:

Release cash tied up in slow-moving inventory
Fund seasonal stock purchases (Christmas, summer, back-to-school)
Expand product ranges without depleting cash reserves
Maintain stock levels during growth phases

UK stock finance lenders we work with specialise in wholesale and distribution businesses.

Manufacturers

Manufacturers often need to purchase raw materials before production and hold finished goods before delivery. Stock and trade finance helps you:

Fund raw material purchases for large production runs
Pay suppliers for components and materials
Maintain working capital during long production cycles
Bridge the gap between production costs and customer payment

Retailers (Especially E-commerce)

Retailers purchasing stock from suppliers (especially overseas) can use trade finance to:

Pay suppliers for seasonal stock (Christmas, Black Friday, summer)
Fund new product launches without cash flow strain
Scale inventory during growth phases
Fulfill large orders from wholesale customers

E-commerce businesses importing products from China or other low-cost manufacturing countries particularly benefit from trade finance.

Benefits of Stock & Trade Finance

Fund earlier in the transaction cycle – Unlike invoice finance (which funds after delivery), stock and trade finance provide capital when you need to pay suppliers, allowing you to fulfill orders you couldn’t otherwise afford.

Preserve cash flow – Pay suppliers without depleting cash reserves, overdrafts, or credit cards. Keep working capital available for operational costs.

Fulfill larger orders – Take on orders that exceed your current cash flow capacity. Trade finance allows you to say “yes” to profitable opportunities.

Revolving facilities – Both stock and trade finance are revolving credit facilities. As you sell stock and repay advances, you can draw additional funding for new purchases.

Linked to invoice finance – Stock and trade finance work seamlessly with invoice finance facilities, creating a complete working capital solution that covers the entire trading cycle.

Competitive advantage – Pay suppliers faster (or upfront), which can secure better pricing, priority shipping, or exclusive product access.

Scalable – As your business grows and order volumes increase, your stock and trade finance facilities can scale with you.

How Much Does Stock & Trade Finance Cost?

Stock and trade finance costs depend on facility size, transaction frequency, risk profile, and your business’s financial strength.

Typical costs:

Stock Finance:

Interest rate:1-3% per month on the amount advanced (12-36% annually)
Advance rate:20-30% of stock value
Minimum facility:£500k-£1m stock value
Setup fees:£2,000-£5,000 depending on complexity

Trade Finance:

Interest rate:1-2.5% per month on the amount advanced (12-30% annually)
Advance rate:Up to 100% of supplier payment
Transaction fees:£500-£2,000 per transaction (depending on size)
Setup fees:£2,000-£5,000 depending on complexity

Both facilities require invoice finance: Invoice finance typically costs 0.5-3% of invoice value + interest on funds advanced.

Example cost breakdown (Trade Finance):

Scenario: You need to pay a Chinese supplier £100,000 for goods ordered by a UK retailer.

Trade finance advance:£100,000 (lender pays supplier directly)
Interest rate:2% per month
Time to customer payment:90 days (3 months)
Interest cost:£100,000 x 2% x 3 months = £6,000
Transaction fee:£1,000
Total cost:£7,000 (7% of transaction value)

Compare this to:

Not fulfilling the order:Lost £100,000 sale + lost customer relationship
Using a business loan:8-15% APR but requires monthly repayments regardless of sales
Using an overdraft:10-20% APR + risk of facility withdrawal

Our promise: We compare stock and trade finance providers across the UK market to find you the most competitive rates and terms.

Am I Eligible for Stock & Trade Finance?

Stock and trade finance are specialized facilities with specific eligibility criteria.

Minimum requirements:

For Stock Finance:

Stock value of at least £500k-£1m (varies by lender)
Regular stock turnover (you sell and replenish inventory)
Existing or new invoice finance facility
Stock stored in secure, accessible premises
Stock must be saleable and in good condition

For Trade Finance:

Confirmed purchase orders from creditworthy customers
Established supplier relationships (or reputable suppliers)
Existing or new invoice finance facility
Ability to demonstrate trading history (typically 12+ months)
Goods must be shipped to you or your customer (not drop-shipped to end consumers)

You may still qualify even if:

You’re a relatively new business (under 2 years) with strong orders
You have some adverse credit (depends on order quality and customer creditworthiness)
You’ve been declined by your bank for traditional lending

Not sure if you qualify? Contact us for a free assessment. Stock and trade finance have complex eligibility criteria, and we can quickly determine if your business and orders are suitable.

Why Choose Capital 8 Finance?

I Understand Cash Flow Challenges

Having run my own hospitality business for over 10 years, I understand the frustration of having to manage cash flow to ensure a business continues to function

Specialist Lender Access

Stock and trade finance are niche products offered by specialist lenders, not high street banks. I have established relationships with:

Trade finance specialists (HSBC Trade Finance, Barclays Trade Finance, Lloyds Trade Finance, Santander Trade Finance)
Invoice and stock finance providers (Bibby Financial Services, Hitachi Capital, Close Brothers Commercial Finance, Skipton Business Finance)
Import finance specialists (UK Export Finance, TFG (Trade Finance Global), Stenn International)
Alternative finance providers (Kriya, Capify, iwoca)
Complex case specialists for businesses with limited trading history or unique funding needs

This gives you access to lenders you wouldn’t find on your own, and I can compare rates and terms across the entire market to secure the best deal for your business.

Scotland-Based, UK-Wide Service

Based in Dundee, I serve importers, wholesalers, and manufacturers across Scotland and throughout the UK. I understand the unique challenges of Scottish and UK businesses trading internationally and can connect you with lenders experienced in cross-border transactions.

Linked Facilities Expertise

Stock and trade finance must be linked to invoice finance facilities. I can arrange the entire package – invoice finance, stock finance, and trade finance – as a complete working capital solution, ensuring all facilities work seamlessly together.

Fast, Personal Service

Stock and trade finance deals move quickly (especially trade finance for time-sensitive shipments). I’ll respond to your enquiry within 24 hours and work urgently to secure funding before your supplier deadlines.

Get Your Free Stock & Trade Finance Quote

Ready to fund your inventory purchases and supplier payments?

Here’s what happens next:

Initial consultation– We’ll discuss your stock holdings, supplier relationships, customer orders, and funding needs
Lender matching– I’ll identify suitable stock and trade finance providers from our panel
Quote provided– Within 48-72 hours, I’ll provide you with facility options, rates, and terms
Application submitted– Once you choose a lender, I’ll handle the entire application process
Facility approved– Most stock and trade finance facilities are approved within 2-4 weeks
Funding released– Once approved, you can start drawing funds to pay suppliers and purchase stock

Contact Capital 8 Finance today for your free stock and trade finance assessment.

Frequently Asked Questions

What’s the difference between stock finance and trade finance?

Stock finance releases cash from inventory you already own and have in your warehouse. Trade finance pays your suppliers for goods you’re ordering (before they arrive). Stock finance is retrospective (funding existing stock), while trade finance is prospective (funding future stock).

Do I need invoice finance to get stock or trade finance?

Yes, both stock and trade finance must be linked to an invoice finance facility. This is because the invoice finance facility repays the stock/trade finance advance once you deliver goods and raise invoices. We can arrange the entire package for you.

How quickly can I get stock or trade finance?

Stock finance typically takes 2-4 weeks to set up (requires stock audits and valuations). Trade finance can be faster (1-2 weeks) if you have urgent supplier payments, though the initial facility setup takes 2-4 weeks. Once facilities are in place, subsequent transactions are processed within days.

Can I use trade finance for domestic suppliers (UK-based)?

Yes, though trade finance is most commonly used for overseas suppliers (importers). If you’re purchasing from UK suppliers against confirmed orders, trade finance can still apply, though invoice finance or purchase order finance might be more suitable.

What are INCO terms?

INCO terms (International Commercial Terms) define who pays for shipping, insurance, and customs duties when goods are imported. Common terms include FOB (Free On Board), CIF (Cost, Insurance, Freight), and EXW (Ex Works). Trade finance lenders pay suppliers according to the agreed INCO terms.

Is stock finance suitable for small businesses?

Stock finance typically requires minimum stock values of £500k-£1m, making it more suitable for established wholesalers, distributors, and manufacturers. Smaller businesses may find invoice finance or business loans more appropriate.

Can I get trade finance if I’m a new importer?

Possibly, if you have strong confirmed orders from creditworthy customers and established supplier relationships. Trade finance lenders focus heavily on the quality of your customer (the buyer) and the supplier’s reputation.

What happens if my customer doesn’t pay?

If you have recourse invoice finance (most common), you’re responsible for customer non-payment. The invoice finance facility will require repayment, which means you’ll need to repay the linked stock or trade finance advance. Non-recourse invoice finance (where the lender takes the credit risk) is available but more expensive.

Can I use stock finance for seasonal inventory?

Yes, stock finance is ideal for seasonal businesses (retailers stocking for Christmas, garden centers for spring, etc.). You can draw funding when you purchase seasonal stock and repay as you sell it.

Stock & Trade Finance.