When a supplier is demanding payment now

The email has gone from polite to blunt. Your account manager has stopped returning calls, the accounts team is now copying in someone senior, and the last line says the account must be cleared by Friday or supply stops. Meanwhile your own customers are paying you on 45 or 60 days, and the cash simply isn’t sitting in the account.

This is one of the most common pressure points in Australian business, and it rarely means the business is failing. Usually the dates when cash arrives and when it leaves have simply slipped out of step. The way through is to understand what the supplier can really do, make an offer they can say yes to, and only then decide whether finance belongs in the plan.

What can the supplier actually do?

A demand is only as strong as the rights behind it. Dig out the credit application you signed when you opened the account, because almost everything turns on it.

Supplier’s lever	How it works	How worried to be
Stop credit or supply	Moves you to cash on delivery or stops orders	Serious if they’re hard to replace; mild if alternatives exist
Retention of title	Their terms say they own the goods until paid; registered on the PPSR, they may recover unsold stock	High if your stock is mainly theirs
Director’s guarantee	A clause you may have signed making you personally liable	High: it reaches your personal assets
Statutory demand	Open to them if a company owes $4,000-plus and the debt isn’t genuinely contested	High: 21 days to act, see statutory demand received
Debt collector or court claim	Slower route through a collection agency or local court	Moderate, but it adds costs and can lead to a judgment
Credit listing	A default reported against the company or a guarantor	Moderate; it affects future borrowing

Two of those are worth checking today. First, search the PPSR to see whether the supplier has registered a security interest against your business; our glossary entry on retention of title explains what that means in practice. Second, read the guarantee clause. If you signed personally, the supplier’s patience matters more than you might have assumed.

Is the supplier right?

Before paying or borrowing, reconcile the account. Disputes over short deliveries, damaged goods, pricing errors and unapplied credits are common, and a supplier chasing a figure that’s wrong by a few thousand dollars will often fix it once shown. If part of the amount is genuinely in dispute, say so in writing and offer to pay the undisputed portion now. That’s a reasonable position and it changes the tone of the conversation.

How to negotiate time that sticks

Suppliers hear “the cheque is in the mail” every week. What moves them is specificity. A good written offer has four parts:

1. An amount today, even a modest one, to show good faith.
2. Fixed dates and amounts for the rest, ideally tied to when your own customers pay.
3. What you’ll do about new orders: perhaps cash on delivery for a period, or a lower credit limit.
4. A named contact who’ll call before any date is missed.

Ask for the agreement to be confirmed by email. If you want help framing the conversation, our guide on how to negotiate better supplier terms works through the longer-term side.

Think too about why the cash isn’t there. If a large customer is paying you slowly, check whether it reports under the Payment Times Reporting Scheme, under which big companies must publicly report their payment times to smaller suppliers. It won’t force them to pay, but knowing their published track record helps when you ask for your own money sooner.

When finance makes sense, and which kind

Borrowing to pay a supplier is sensible when the supplier relationship is worth more than the cost of the finance: an exclusive range, a key input for a contract, or an early-payment discount that outweighs the fees. It’s a poor answer when every account is behind and next month looks the same.

Banks are a good first call if you already bank with them and have a clean record. A modest increase to an existing overdraft or facility is often the cheapest fix and can be quick for an established customer. If the bank can’t move fast enough or says no, these are the usual alternatives:

• Trade finance pays the supplier directly, then you repay over a set period, commonly somewhere between 60 and 180 days. It’s built for exactly this problem and suits importers and wholesalers.
• Invoice finance releases cash tied up in your own unpaid invoices, so slow customers stop being the bottleneck.
• A business line of credit sits ready for the next supplier bill, and interest applies only to the drawn balance.
• A short unsecured loan from a fintech or non-bank lender, assessed mainly on turnover and account history, can pay out within a day or two for amounts up to a few hundred thousand dollars.
• Property-secured options such as a caveat loan suit large amounts or when other lenders have declined.

Not sure which fits your supplier problem? Outline it for us: about a minute, and asking leaves your credit record alone.

An illustrative example

A Brisbane building-supplies wholesaler owes its main timber importer $86k, about 40 days overdue. The importer has registered its retention of title on the PPSR and is threatening to stop supply in seven days. The wholesaler’s own debtors owe $210k, mostly builders on 45-day terms.

Instead of a lump-sum loan, the wholesaler offers the importer $20k immediately and the balance in three fortnightly instalments, and sets up invoice finance against its debtor book. The facility pays out the bulk of each approved invoice within days, comfortably covering every instalment. The importer accepts in writing and keeps supply flowing. The owner’s cost is the facility charges on whichever invoices get funded, weighed against the margin on the timber still arriving.

Before picking a product, chart your shortfall week by week in the cash flow gap calculator.

What not to do

• Go silent. Unanswered calls are what push a supplier towards a statutory demand or a collector.
• Promise a date you can’t meet. A broken promise costs more goodwill than an honest later date.
• Pay the loudest creditor first by default. Prioritise the supplier you can’t trade without and any account backed by retention of title or your personal guarantee.
• Stack expensive short loans. Two or three daily-repayment loans on top of each other can turn one overdue account into a cash flow spiral.
• Ignore the tax office. Clearing a supplier while BAS and super fall behind just moves the problem somewhere tougher.

For more on the purpose side, see our page on paying suppliers.

Keeping your supply chain intact: the next step

Supplier pressure is something our team deals with constantly, from wholesalers and importers to trades and hospitality. The answer is sometimes a facility that fixes the timing for good, and sometimes a short loan to get past one bad month.

Explaining your position takes a minute or so, and no credit check is run while you’re only asking. Your file isn’t shopped around to multiple lenders. One of our specialists looks at the account you owe, what your customers owe you and your timeline, then calls you to talk through it. Be accurate about the amount, how overdue it is and whether a guarantee is involved, which lets us lead with something workable.

Find a way to pay your supplier →