How to plan cash flow for a China order
Put every payment and customer receipt on a dated calendar, using agreed payment triggers rather than the factory's delivery estimate. Track the running bank balance, confirm how import taxes will be handled and test delayed receipts before paying a deposit. Cambridge China Bridge can help confirm supplier milestones.
Start with cash movements, not unit costs
Use your landed-price calculation to identify costs, then turn them into dated cash movements. Include the full payment for tooling when it leaves your bank, even if you spread that cost across future orders for pricing. Record the payee, currency, estimated sterling debit, payment trigger, expected bank date and whether the amount is confirmed.
Establish who invoices you and who handles the import before adding tax payments. If you buy through a UK seller, use its agreed invoice schedule and ask what the delivered quote includes. Avoid adding a separate factory payment, freight bill or import-tax payment that is already covered by that invoice.
Tie deposits and balances to agreed triggers
Copy the deposit and balance terms from the agreed order documents. Do not assume a standard split. Record what triggers each payment, the evidence needed for approval and when funds must reach the recipient. Use safe supplier payments for the checks before releasing money.
Ask the freight provider when each charge becomes payable, including booking, transport, clearance, delivery and any charges excluded from the quote. Connect these dates to the whole shipping schedule, keeping production completion, inspection, collection and warehouse arrival separate.
| Cash movement | Date to establish | Confirmation to keep |
|---|---|---|
| Samples and tooling | Agreed approval or invoice trigger | Scope, invoice and payment terms |
| Order deposit | Agreed payment date | Order terms and recipient details |
| Balance payment | Agreed release milestone | Required inspection or document evidence |
| Freight and delivery | Provider's payment deadlines | Quote inclusions and invoice schedule |
| Import taxes | Confirmed payment or accounting route | Agent's instructions and accountant's forecast |
| Customer receipts | Expected cleared-funds date | Sales forecast, credit terms and payout schedule |
Confirm the tax route before forecasting cash
For an eligible import, postponed VAT accounting means declaring and recovering import VAT on the same VAT Return instead of paying it upfront and recovering it later. UK VAT registration is required, and normal input-tax recovery rules still apply. Ask your accountant to confirm eligibility and the cash effect for this order; do not assume all import VAT is recoverable.
If someone imports on your behalf, they need your written instruction before using postponed VAT accounting on the declaration. A duty deferment account allows monthly payment by Direct Debit. Ask the customs agent which route will actually be used and when your business will be debited. Keep duty payments separate from VAT accounting entries, and use the import VAT guide for the wider explanation.
Extend the calendar until customers pay
Warehouse arrival is not a customer receipt. Allow for stock checks, preparation for sale, the time needed to sell, customer credit terms and any payment-platform payout delay. Use expected cleared-funds dates. For stock sold gradually, spread receipts across the selling period rather than entering the entire forecast on arrival.
Base receipts on your own sales and collection history where available. Keep confirmed customer orders separate from speculative sales, and account for refunds and deductions. Add the next order's deposit if replenishment must start before this shipment has generated enough cash.
Find the funding gap before committing
Start with available bank funds, add expected receipts and subtract payments in date order. Include payroll, rent, other orders and the accountant's forecast tax payments in the business-wide calendar. Find the lowest projected balance and compare it with the cash reserve you need to keep operating.
Run a delayed case with later shipment, slower sales or late customer payments, plus extra costs supported by quotes. Do not automatically move supplier payments later when delivery slips: check the agreed triggers. If cash falls below your reserve, arrange funding or agree revised order terms before committing. Replace estimates with invoices and actual bank movements as the order progresses.
Frequently asked questions
How much cash do I need before ordering from China?
Forecast the lowest bank balance from deposit to customer receipts, including other business payments and overlapping orders. Arrange enough funding to keep your operating reserve intact in the delayed case.
When should I put the supplier balance in my forecast?
Use the agreed payment trigger and the date funds must reach the supplier. Keep the approval evidence beside the entry. Do not substitute the estimated warehouse arrival date.
Does postponed VAT accounting remove the cash-flow gap?
It can avoid upfront import VAT for eligible imports, subject to normal recovery rules. You still need to fund goods, freight, duty and the wait for customer receipts.
Should I count sales as cash when stock arrives?
Use the date you expect cleared funds, allowing for preparation, selling time, customer credit and payout delays. Spread receipts if the stock will sell gradually.