Tariffs and Import Cash Flow: Paying Landed Cost Before You Sell
Duties raise what you pay up front, and your customers still pay on net terms. Fund the supplier and the gap with financing tied to orders you already hold.
- ✓Supplier paid. Up to 100% of verified supplier cost goes to your manufacturer.
- ✓Customs handled. The lending partner manages shipping, customs clearance and delivery on PO deals.
- ✓Invoices funded. After delivery, total funding reaches 70%–90% of the PO.
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Message a SpecialistExecutive Summary: Tariffs and Import Cash Flow
What it is: A tariff cost increase is a rise in import duties that lifts the landed cost of inventory, which you pay before the goods sell. Landed cost covers the product, freight, insurance, duties and clearance fees.
The numbers: Purchase order financing pays up to 100% of verified supplier cost, and the invoice advance after delivery brings total funding to 70%–90% of the original purchase order. The fee is 1%–3% on the resulting invoice. Approval comes the same day, and new accounts close in 2–5 days.
Key constraints: PO financing needs a confirmed purchase order from a creditworthy business customer. Stock with no buyer yet, B2C sales and invoices past due over 90 days do not qualify. Tariff rates change often, so confirm current duty rates before you price an order.
The Fast Facts on Tariffs and Import Cash Flow
How do tariffs affect cash flow?
The short answer is that import tariffs raise the cash you pay before you sell. Duties come due when goods clear customs, and your customer still pays on net-30 or net-60 terms, so a higher rate widens the gap between paying out and collecting.
Can PO financing cover the supplier when tariffs raise costs?
Yes, you can fund up to 100% of verified supplier cost through purchase order financing, paid directly to one or several manufacturers. After delivery, the invoice advance brings total funding to 70%–90% of the original purchase order, and the lending partner handles shipping and customs clearance.
What is landed cost?
Landed cost is defined as the full cost of getting imported goods to your door: the product price, freight, insurance, duties and clearance fees. When a tariff rises, landed cost rises with it, and you pay that increase before your customer pays you.
Where tariffs hit your cash
At the supplier
Your manufacturer wants payment before it ships, often 30 to 60 days before the goods land.
At customs
Duties come due when goods clear. A higher rate means more cash leaves your account at the port.
At the customer
Your buyer still pays on net terms, so the extra landed cost sits on your books until the invoice clears.
How a purchase order deal flows
| Stage | What happens | Funding |
|---|---|---|
| Order | Your customer issues a purchase order | None yet |
| Supplier payment | Your manufacturer receives payment for verified cost | Up to 100% of verified supplier cost |
| Shipping and customs | Goods ship, clear customs and reach your customer | Covered within the PO deal |
| Invoice | You bill your customer after delivery | The advance brings total funding to 70%–90% of the PO |
| Settlement | Your customer pays the invoice | You receive the balance minus the 1%–3% fee |
Ways to absorb a tariff increase
Fund the order
Use PO financing on confirmed orders so the supplier payment stays out of your operating account.
Fund the receivable
Once goods deliver, invoice factoring turns a net-60 invoice into cash within 24 hours on an active account.
Borrow against inventory
If you hold stock without a buyer yet, asset-based lending advances up to 50% of inventory value.
PO Financing vs. Bank Line of Credit vs. Merchant Cash Advance (MCA) for Importers
| Feature | PO Financing | Bank Line of Credit | Merchant Cash Advance (MCA) |
|---|---|---|---|
| Typical approval speed | Same day | Several weeks (Estimated) | 1 to 3 days (Estimated) |
| Pays your supplier directly | Yes, up to 100% of verified supplier cost | No | No |
| Minimum credit score | None | Often 680 or higher (Estimated) | Often 500 or higher (Estimated) |
| Maximum advance | 70%–90% of the PO total | Variable | Variable |
| Cost | 1%–3% on the resulting invoice | Variable interest plus covenants | Factor rate, often high (Estimated) |
Funding scenarios for tariffs and import cash flow
Importer fills an order after a duty increase
- Funding Amount
- $200,000
- Industry
- Consumer electronics accessories
- Customer Type
- Importer selling to regional retailers
- Funding Type
- Purchase order financing
- Invoice Terms
- Net-60
- Advance Rate
- 80% of PO total
A $250,000 retailer order came in the month duties on the product line rose.
The SolutionPO financing paid the $140,000 verified supplier cost to the manufacturer. After delivery, the invoice advance brought total funding to 80% of the order.
ResultTotal funding of $200,000 (80% of $250,000), with the order delivered on time.
Apparel wholesaler covers higher landed cost
- Funding Amount
- $102,000
- Industry
- Apparel wholesale
- Customer Type
- Wholesale apparel importer
- Funding Type
- Invoice factoring
- Invoice Terms
- Net-60
- Advance Rate
- 85%
Duties pushed landed cost up on a spring line, and department store buyers paid on net-60.
The SolutionThe wholesaler factored $120,000 in delivered invoices once its account was active.
ResultReceived $102,000 (85% of $120,000) within 24 hours and paid the next container's duties.
Parts distributor stocks up before a rate change
- Funding Amount
- $330,000
- Industry
- Industrial parts distribution
- Customer Type
- Auto parts distributor
- Funding Type
- Asset-based lending
- Invoice Terms
- Net-45
- Advance Rate
- Variable
The distributor bought six months of stock before a scheduled tariff rise and tied up its cash in inventory.
The SolutionAn asset-based line advanced up to 90% of $200,000 in qualifying receivables and up to 50% of $300,000 in inventory.
ResultLine availability of $330,000 ($180,000 plus $150,000).
Who the tariffs and import cash flow guide is for
Importers selling to retailers
You buy finished goods overseas and sell to chains that pay on net-60.
Wholesale distributors
Duties raised your landed cost and your customers will not pay sooner.
Manufacturers sourcing parts
You import components for confirmed orders and need the supplier paid before production.
Where IFXI arranges invoice factoring
Texas, Florida, New York, Illinois, Georgia, Ohio, and Pennsylvania.
Frequently asked questions about tariffs and import cash flow
Who pays the supplier in PO financing?
The short answer is that PO financing funds go straight to your manufacturer. PO financing pays up to 100% of verified supplier cost to one or several suppliers, and the lending partner handles shipping, customs clearance and delivery to your customer.
Can I use invoice factoring to cover higher tariffs?
Yes, you can factor the invoices you bill after delivery and use the cash for your next duty payment. You receive 70%–90% of each approved invoice within 24 hours once your account is active, at a 1%–3% fee.
What makes an import order ineligible for PO financing?
The short answer is that a missing or weak buyer makes an import order ineligible for PO financing. You need a confirmed purchase order from a creditworthy business customer. Stock bought with no buyer and sales to consumers do not qualify. See the PO financing and factoring comparison.
How long does it take to set up funding for an import order?
The short answer for import order funding is same-day approval and a 2–5 day closing for a new account. Set up before your supplier needs payment, since a new account takes at least 2 days to close. Each later invoice funds within 24 hours on the active account.
General information about tariffs and import cash flow. Rates, advance amounts and approval come from IFXI’s lending partner after its review and can change.
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