A small contractor has won a project and plans to buy an aerial work platform from China. The expected project revenue can cover the equipment. Yet when the Chinese supplier asks for the final balance, the company does not have enough cash in its account: wages and site costs continue while the client's progress payment is due only after the next milestone.
A profitable project on paper can still produce a cash shortage today. Import purchasing therefore requires two separate calculations: the total cost and the dates on which money must actually leave the business.
1. Identify the mismatch before signing
Assume an equipment purchase price of USD 30,000 and an agreed 30% deposit / 70% balance before shipment. This is an illustrative contract, not a standard term for all Chinese suppliers.
Deposit: 30,000 × 30% = USD 9,000. Balance: 30,000 × 70% = USD 21,000. Freight, import charges and local delivery will create additional payments later.
The contractor must also pay employees, site expenses and ongoing operating costs. A future receivable is not cash available for today's supplier payment.
2. Calculate the maximum shortfall
Assume USD 24,000 in available starting cash. All dates and amounts below are fictitious; a negative balance represents funding required, not permission to overdraw the bank account.
| Date | Cash event | Cash movement (USD) | Projected available cash (USD) |
|---|---|---|---|
| Start | Available cash | — | 24,000 |
| D0 | Equipment deposit | −9,000 | 15,000 |
| D30 | Essential project and business expenses | −7,000 | 8,000 |
| D35 | Equipment balance | −21,000 | −13,000 |
| D55 | Freight, import and destination charges | −6,000 | −19,000 |
| D60 | Further operating expenses | −7,000 | −26,000 |
| D90 | Further operating expenses | −7,000 | −33,000 |
| D100 | Expected project receipt | +38,000 | 5,000 |
The worst cash gap before the expected receipt is USD 33,000. If the business also requires a USD 4,000 liquidity buffer, it must arrange approximately USD 37,000 of additional available funding or change the actual timing and amounts of receipts and payments.
A USD 38,000 expected payment on D100 does not help the supplier payment due on D35 unless financing or another bridge is already available. The table omits finance charges, income tax and unlisted costs; an actual rolling cash forecast should include them.
3. Stress-test delayed client payment
If the USD 38,000 receipt slips from D100 to D130 and another USD 7,000 operating payment falls on D120, the peak projected shortfall increases to USD 40,000. Preserving the same USD 4,000 buffer would require up to USD 44,000 in financing or other liquidity adjustments under this scenario.
Distinguish cash already received, contractually due but unpaid, and still uncertain expected receipts. The number on a project contract is not automatically money available for the next equipment invoice.
4. Four workable responses—with limits
A. Negotiate the procurement milestones before commitment. Ask which production, inspection and handover conditions each supplier payment relates to. Propose a specific alternative only if both parties can agree in writing. Lowering the deposit from 30% to 20% does not solve the problem if the same large balance is still due before the client pays.
B. Align legitimate client progress payments with the purchase plan. If the construction contract is still being negotiated, consider whether a genuine completed-work milestone or appropriate advance payment can improve timing. An agreed receivable may still be delayed; keep a reserve.
C. Adjust the equipment plan. Compare temporary local rental, a smaller first purchase or delaying the imported equipment to the next job. Include bridge-rental costs and the effect on the project rather than assuming postponement is free.
D. Use financing only when it is available on usable terms. Confirm approval, funding date, fees, interest and repayments for bank credit or other lawful facilities. Financing bridges timing; it does not make an uneconomic acquisition profitable. The administrative cost of specialized trade finance may be disproportionate for a smaller order.
5. Practical supplier negotiation: bring a workable proposal, not just an apology
“Can I pay the balance later?” gives the supplier little information. A better approach is:
See the guide to checks before paying the balance for the relevant checks.
Have the salesperson coordinate with the supplier's finance and management staff; production and dispatch staff also need to understand any changes affecting release or collection. Any agreed amendment belongs in the written contract or order confirmation—not just an instant-message exchange.
6. Decide before the cash becomes urgent
Before signing, extend the forecast through machine readiness, the project's major client receipts and essential operating payments. Ask whether every committed payment has a funding source, whether the business can survive a late client receipt, and whether rental, staged procurement or other arrangements produce a safer overall outcome.
If a critical shortfall cannot be funded and the purchase would endanger ordinary operations, do not proceed on the original payment timetable purely because the project appears profitable.
A machine may make economic sense over the whole project and still exhaust a small contractor's cash at the wrong time.
Need to compare supplier payment and delivery arrangements?
Send Levantis your Chinese supplier's quotation, proposed payment milestones and expected purchase window. We can help clarify the China-side contractual stages, inspection and handover conditions, and discuss with the supplier what alternatives may be considered. We cannot promise credit terms, finance the transaction or manage your project cash flow.