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Consignment stock and supplier finance: the 50/50 structure that completes a deal

When a lender will only fund half the order, your supplier can often carry the rest. How consignment stock and supplier-finance top-ups complete trade deals.

Reading time 5 min read

Category Business guides

Written by The bizbritain team

Sometimes the facility a lender offers covers only part of the order you need to place. The instinct is to treat that as a decline. It usually is not. The missing half is often available from the most overlooked finance provider in your supply chain: your supplier.

Consignment stock and supplier finance are old, unglamorous tools, and combined with a trade facility they regularly turn a deal that almost works into one that completes. Here is how the structure fits together.

Section 01

Two tools suppliers already understand

Consignment stock means the supplier ships the goods but keeps ownership until you sell or use them. You hold the stock, you pay for what sells, and unsold goods can go back. Your cash is never in the warehouse; it is only ever in transactions that have already happened.

Supplier finance is simpler still: extended payment terms. Sixty, ninety, sometimes 120 days, occasionally in exchange for a small uplift in price. If the terms outlast your sales cycle, the supplier has effectively funded the deal for you.

Section 02

The 50/50 structure, worked through

Take a round-number example: a £200,000 stock purchase with strong margins, where the lender is comfortable funding half.

Part 1

Fund the half a lender likes

A trade or stock facility covers £100,000, underwritten on the transaction: the orders behind it, the margin in it, and the sell-through evidence.

Part 2

The supplier carries the rest

The remaining £100,000 ships on consignment or extended terms. The supplier keeps title until sale, so their risk is stock they can recover, not an unsecured debt.

Title retention. The supplier owns unsold stock, which is why they can say yes.
Insurance and reporting. You insure the stock and report sell-through on an agreed rhythm.

Part 3

Sales repay both sides

As stock sells, the facility is repaid and the supplier is paid for consigned goods. The structure winds itself down deal by deal.

If the stock sells through in ninety days, who is paid, when, and from what?

Answer that question on one page and you have the whole proposal: it is the first thing both the lender and the supplier will want to see.

Section 03

Why suppliers say yes

Myth 01

“My supplier would never agree to consignment”

Suppliers are often better financed than their customers, and volume matters more to them than payment speed. A structure that keeps their title, insures their goods and grows the order is frequently an easy yes.

The suppliers most likely to agree are the ones whose growth depends on yours.

Frame the conversation commercially: a bigger order, faster reordering, and their downside limited to taking their own stock back. If a price uplift is asked for, work it into the same pounds-over-the-cycle sum you would apply to any facility fee.

Section 04

Getting both halves agreed at once

The structure only works when the lender and the supplier terms are negotiated together; each side wants to see the other committed. That coordination is the actual job, and it is where an advisor earns their fee.

bizbritain arranges the funded half through its growth finance panel of 100+ lenders and helps you shape the supplier half so the two dovetail. Start with the basics in trade finance explained, or bring us the order on the business growth loans page and an advisor will reply the same working day.

This guide is general information, not financial advice. Applications are subject to status, affordability and lender criteria.

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