Turnover is not the cash available for repayments

The order looks good. The bank balance feels different.

Imagine a small wholesale business that wins a £40,000 order. It expects £12,000 of gross margin after the goods cost £28,000. The order looks attractive, and it could introduce the company to a larger customer. But the supplier wants paying before dispatch and the customer will pay after delivery.

The £40,000 sale has not solved the supplier payment due today. Until the customer receipt arrives, the company needs to fund the goods and continue meeting its normal bills. A business owner describing only the new turnover can accidentally hide the very reason funding is needed.

This is a fictional example, not a model of a particular business. Its usefulness is the sequence: an economic opportunity and a cash requirement can appear at the same time. The funding discussion needs both parts.

Put the order on a calendar

Write the dates for the deposit, supplier balance, delivery, invoice and expected customer payment. Then add wages, rent, tax and existing finance payments in the same period. A list of totals without dates cannot show which payment creates the tightest point.

Use the customer’s likely receipt date rather than automatically using the invoice due date. If this is a new relationship, say that the actual payment behaviour is not yet established. If a regular customer is habitually late, show that experience in the forecast rather than erasing it to make the numbers balance.

A profitable job can still need working capital

The gross margin in the example is not the same as the company’s eventual profit, because ordinary overheads and other costs still exist. It is also not the same as cash available before collection. Keep those measures separate when explaining the request.

The British Business Bank describes working capital finance as funding related to everyday operating needs ^[1]. The practical task for the business is to identify the particular timing gap. “We are growing” is a useful context; “we pay £28,000 three weeks before a £40,000 receipt” is a funding question that can be investigated.

Growth can also change several cycles at once. More sales might require more stock on the shelf, another employee and a bigger delivery run. Record which expenses belong to the new order and which become ongoing commitments.

Test the gap before testing a finance product

Create a base forecast using a reasonable receipt date. Then move the customer payment later by a period that would matter to the company. Keep supplier payments and fixed costs in place unless there is a realistic agreed way to move them. The second scenario shows whether the business has a timing cushion.

Do not insert an unexplained receipt called “funding” whenever the balance goes negative. That turns the question into its own answer. Instead, identify the maximum shortfall, its date and the period over which it exists. Then ask which options could address that defined requirement.

The company may be able to change the commercial sequence as well as explore finance: a customer deposit, smaller delivery batches or different supplier terms are questions worth asking. Their availability depends on the actual relationships and agreements.

Match the discussion to the cause

If cash is tied up in eligible business invoices, invoice finance is a category to understand. If the expenditure is a long-lived asset, an equipment-related arrangement raises different questions. A one-off lump sum and a recurring receivables gap should not automatically be presented as the same need.

These are starting categories, not a recommendation for the fictional wholesaler or your company. A broker needs the actual evidence and a provider applies its own assessment. The purpose of the calendar is to make that conversation specific enough to be useful.

What to bring to the first conversation

Bring the amount, purpose, cash dates, expected source of repayment and the company’s existing commitments. Explain whether the order is signed, whether the invoice can be raised and whether customer acceptance is still outstanding. A factual complication is more useful than a neat story that falls apart when documents arrive.

Our cash-flow guide gives you a small table to start with. Once a proposal exists, add its actual advance, deductions and payment dates to the forecast. Turnover can explain the scale of the business; the calendar explains whether money is there when the repayment is due.