China Sourcing Cash-Flow Timeline: From Deposit to Sales Cash

A China order needs more than a landed-cost estimate. It needs a dated cash-flow forecast showing when the deposit, balance, freight, import charges and local costs leave the business—and when customer receipts actually return.

Build that timeline before approving the purchase order. The key output is not only total cost. It is the lowest projected cash balance between the first sourcing expense and the final sales receipt.

Profit, cash flow and working capital answer different questions

Profit asks whether revenue exceeds costs over a period. Cash flow tracks when money enters and leaves the bank account. Working capital is the short-term financial capacity needed to carry the order while cash is tied up.

A profitable order can still create a cash shortage. The supplier may receive most or all of the product payment before the stock ships. Freight, duty, import GST, clearance and delivery can then fall due before the first unit is sold. A sale is not necessarily cash available: marketplace settlements, card processors and wholesale credit terms can delay receipt further.

Australian Government cash-flow guidance recommends forecasting inflows and outflows and managing inventory and payment terms deliberately. For an importer, the useful forecast is event-based rather than a single monthly cost total.

Map seven groups of cash events

Start with the order date and enter each event on the date cash is expected to clear—not merely when a document is issued.

Do not copy timing from a previous shipment without checking the new order. Product, season, inspection outcome, freight mode, customs treatment, channel and customer terms can change the sequence.

Worked cash-flow timeline—hypothetical only

The following example demonstrates the method. It is not a benchmark for supplier terms, lead times or import costs.

Assumptions: an Australian importer approves a custom order on 1 September; the supplier invoice is AUD 80,000 equivalent under the buyer's planning rate; production is modelled at 45 days; international transit at 28 days; and customer receipts arrive in three tranches after stock becomes saleable. All figures are invented and rounded.

In this scenario, the order produces AUD 140,000 of receipts against AUD 120,000 of attributed cash outflows. Yet it first requires AUD 120,000 of funding and stays cash-negative until late in the sell-through period.

The apparent AUD 20,000 surplus does not prove accounting profit. It excludes overhead, returns, financing cost, income tax, unsold inventory and other business cash needs. The table measures only the order's timing burden.

Calculate the peak funding requirement

Use a running balance for the order:

Cumulative order cash position = prior position + cleared receipts − cleared payments

The most negative result is the scenario's peak order funding requirement. Then compare it with cash that is genuinely available after protecting payroll, rent, tax, existing purchase commitments and the minimum operating buffer.

Do not count an undrawn facility or expected customer receipt as available cash until its conditions and timing are understood. This article does not recommend a financing product; the decision is whether the gap exists, how large it could become and who is authorised to accept it.

Import GST can be a timing event even when a credit is available

Australian Border Force states that GST is generally payable on taxable importations when customs duty is paid, unless an exemption or approved deferral applies. The taxable importation value is the sum of customs value, duty, international transport and insurance, and any Wine Equalisation Tax that applies.

The ATO notes that a GST-registered importer may be entitled to an input tax credit for a creditable importation. Payment at the border and recovery through a later BAS are different dates, so a recoverable amount can still create a temporary cash requirement. Approved deferred-GST treatment changes that timing, but eligibility and reporting should be confirmed with the importer’s tax adviser and customs broker.

Do not remove duty or GST from the forecast because a concession, preference or credit is expected. Record the base case supported by current product facts, then record the alternative only after eligibility is verified.

Stress the dates as well as the costs

A useful forecast contains at least a base case and a delayed case.

The purpose is not to predict every disruption. It is to reveal which assumption can push the business below its acceptable cash floor.

Use controls that change timing without hiding risk

• align supplier payments to defined, verifiable milestones rather than calendar dates;
• place smaller or more frequent orders where total economics and production constraints support them;
• separate committed costs from estimates and refresh the latter before each release decision;
• negotiate customer deposits or shorter receivable terms where commercially appropriate;
• schedule launch, listings and fulfilment preparation before stock release so avoidable delays do not extend the cash cycle;
• confirm freight and border funding before authorising the supplier balance; and
• set a reorder trigger using both demand and cash availability.

None of these controls makes a weak order viable by itself. A smaller order can have worse unit economics; delayed supplier payment may be unavailable or priced into the deal; customer prepayments create delivery obligations. Record the trade-off rather than treating timing as free money.

Reorders can create a second trough before the first order recovers

Growth often increases the cash requirement. If the next deposit is due while the first order is still in transit or selling through, two purchase cycles overlap.

1. enter the next reorder date implied by lead time and safety-stock policy;
2. add its pre-order and deposit payments;
3. retain the first order's slower-receipt scenario;
4. include fixed operating cash commitments; and
5. find the new lowest combined balance.

A reorder should not be approved merely because the first order has strong sales. The question is whether cleared receipts arrive before the next large cash release.

Pre-commitment cash-flow checklist

• Every supplier payment has an amount, currency, due date and release evidence.
• Freight quotes state what is included, excluded and when payment is due.
• Duty, import GST, clearance and local delivery are modelled before shipment.
• GST payment, deferral and possible credit dates are recorded separately.
• Customer receipts use settlement dates, not order or invoice dates.
• A delayed-production, delayed-freight and slower-sales case has been tested.
• FX sensitivity is applied to every unpaid foreign-currency amount.
• Fixed business obligations and the operating buffer remain protected.
• Reorder overlap is included.
• One person owns forecast updates and the release decision.

The timeline is a commitment control

A landed-cost total can tell you whether an order appears economic. The cash-flow timeline tells you whether the business can carry it.

Date every payment and receipt, calculate the lowest running balance, test the delays that matter and update the forecast before each material commitment. If the delayed case breaches the business's cash floor, change the order, its timing or the funding plan before paying the deposit—not after the stock is already in production.

For supplier payment-release controls, read Chinese Supplier Payment Terms: Where the Buyer's Risk Actually Sits.

Sources

1. business.gov.au — Guide to managing cash flow
2. business.gov.au — Payment terms
3. Australian Border Force — Cost of importing goods
4. Australian Border Force — GST and other taxes when importing
5. Australian Taxation Office — Common GST errors: importing or exporting
6. Reddit r/smallbusiness — inventory-driven business cash flow (anecdotal audience research only)
7. Reddit r/smallbusiness — inventory order and cash timing (anecdotal audience research only)