Quick answer
Invoice finance lets grocery suppliers draw most of the value of an accepted supermarket invoice soon after delivery, instead of waiting out the payment terms in their supply agreement. Under the mandatory Food and Grocery Code, large grocery businesses must pay within the agreed timeframe and always within a reasonable time after invoicing. Lenders generally like supermarket debtors, but they watch deductions, set-offs and how much of your ledger sits with one buyer.
Key points
- The remade Food and Grocery Code has been mandatory since 1 April 2025.
- Large grocery businesses must pay within agreed terms and within a reasonable time after invoicing.
- Set-offs against your invoices generally need your written consent or a reasonable agreed clause.
- Lenders like supermarket debtors but cap how much they'll advance against one buyer.
- Production costs before delivery need a different tool, such as working capital or PO finance.
Invoice finance gives supermarket and grocery suppliers most of the value of an accepted invoice soon after delivery, rather than waiting out the payment terms in their supply agreement. Under the mandatory Food and Grocery Code, large grocery businesses must pay within the agreed timeframe and always within a reasonable time after invoicing. Lenders generally see supermarket debtors as reliable, but they watch deductions and concentration closely.
For a growing food or grocery producer, that combination can make invoice finance one of the most useful tools available. It just needs setting up with your supply agreement in mind.
Why does winning a supermarket range strain your cash?
Because the money goes out long before it comes back. To fill a new range or a bigger order, you might need to:
- buy ingredients, packaging and labels in larger volumes
- pay for extra production shifts or a co-packer
- fund freight to distribution centres
- carry stock while it moves through the buyer’s supply chain
- pay for promotions or listings, where the agreement allows
Then you invoice, and wait for the payment date set in your agreement. A business that was comfortable supplying independent stores can find a supermarket contract doubles its sales and empties its bank account in the same quarter.
What does the food and grocery code say about getting paid?
The remade Food and Grocery Code came into effect on 1 April 2025 and, according to the ACCC, it’s mandatory for large grocery businesses: retailers or wholesalers whose supermarket or grocery wholesaling revenue exceeded $5 billion in the previous financial year. The ACCC says the transition period ended on 1 April 2026, so every requirement now applies to all grocery supply agreements, whenever they were made. Suppliers to those businesses are covered automatically.
On payment, the ACCC’s page on grocery supply agreements explains that:
- suppliers must be paid for accepted products within the timeframe in the agreement
- suppliers “must always be paid within a reasonable time” after they provide an invoice
- the agreement must state when you’ll be paid and the circumstances in which payment may be withheld or delayed
- a large grocery business must not set off a separate amount you owe against your invoice unless you’ve consented in writing, or the agreement allows it and the amount is reasonable
Because the payment timing has to be written into the agreement, the time to think about cash flow is before you sign, not after the first delivery. Read the payment clause alongside the rejection and set-off clauses, then model a few months of production and deliveries against the actual payment dates. If the numbers show a gap you can’t carry yourself, you’ll know how much funding to line up and when. It’s also worth reading the agreement’s related documents, such as promotion and freight agreements and purchase orders, which the ACCC says form part of the agreement.
The code gives you protections, but it doesn’t make payment immediate. There’s still a gap between delivery and payment, and that’s the gap invoice finance fills.
How does invoice finance work for a grocery supplier?
| Step | What happens | What to watch |
|---|---|---|
| Delivery | Goods arrive at the distribution centre | Get proof of acceptance |
| Invoice | You invoice under your supply agreement | Match order numbers and quantities exactly |
| Upload | The invoice goes to your lender | Often via a link to your accounting software |
| Advance | The lender advances most of the invoice value | Disputed or rejected lines are excluded |
| Payment | The buyer pays on the agreed date | Watch for deductions on the remittance |
| Balance | The lender releases the rest, less fees | Reconcile remittances monthly |
The key risk for lenders isn’t that the supermarket won’t pay. It’s that it pays less than the invoice says, because of rejected goods, promotional deductions or agreed set-offs. That’s why lenders often ask for remittance advices from the past few months so they can see how much of each invoice actually arrives.
Our invoice finance page covers the different types of facility. If you’d like to check whether your supply agreement and ledger suit one, send a short enquiry and a real person will look at it.
What do lenders check on supermarket invoices?
Your supply agreement. It sets payment terms, rejection rights and any set-off clauses. Lenders read it to understand what will really be paid and when.
Your deduction history. Remittances showing regular deductions for promotions, short deliveries or rejections tell the lender to advance a smaller share.
Concentration. If one supermarket is most of your sales, a lender may cap how much it advances against that buyer. Spreading across several buyers, independent grocers or food service helps.
Delivery records. Proof that goods were accepted, not just sent.
Your margins. Big retail volumes at thin margins can leave little room for finance costs. Lenders want to see the numbers work. A simple forecast showing production costs, delivery dates, expected payment dates and finance costs answers most of their questions before they ask.
An illustrative example
Illustrative only. A family-run bakery wins a regional range with a large grocery retailer, worth about $120k a month in extra sales. Its supply agreement sets payment terms of several weeks after invoice. Ingredients, packaging and an extra overnight shift need paying well before the first payment arrives.
The owner arranges a working capital loan to cover the first production run and sets up confidential invoice finance for ongoing deliveries. Each week’s accepted invoices are uploaded, and an advance arrives soon after. The lender caps the retailer’s share of the ledger, so the owner keeps supplying cafés and independent grocers to keep the overall limit healthy. After a few months of remittances show few deductions, the lender lifts the advance against the retailer’s invoices. Our bakery business loans page covers related funding.
What funds the costs before you can invoice?
Invoice finance only starts once there’s an accepted invoice. For everything before that, look at:
- Purchase order finance to pay suppliers against a confirmed order.
- Inventory finance to fund raw materials or finished stock.
- A working capital loan for production costs, wages and freight. Unsecured options typically run from $5k to $500k, sized on turnover and bank statements.
- A property-secured loan, from $20k to $5m, for larger or longer funding needs, such as new equipment for a bigger production line.
Growers face a similar pattern with harvest timing. Our horticulture grower finance page explains how lenders view seasonal supply.
What if there’s a dispute about payment?
Disputes do happen, usually over rejections, deductions or delayed payments. The ACCC’s guidance explains that under the code, a supplier can raise a dispute directly with the large grocery business, which must have a code mediator available to help resolve it.
For your invoice finance facility, disputed amounts usually come out of your available funds until they’re resolved. Keep detailed delivery and acceptance records, and raise disputes promptly, so a single disagreement doesn’t hold up funding against everything else you’ve delivered.
Just won a supermarket range? Fund it properly from day one
Landing a big retail customer is exactly the kind of growth that can catch a well-run food business short of cash. The orders are real and the buyer is reliable; you just need something to carry you between producing the goods and receiving the money.
Our enquiry takes about 60 seconds and there’s no credit check when you first enquire. We won’t send your details to a pile of lenders, so you’re not swamped with calls during the busiest month of your year. A real person who understands supply agreements and retail payment cycles looks at your situation and calls you. Please be accurate on the form, including the size of the new range and your current turnover, so we can match the right mix of funding first time.
Frequently asked questions
Who does the mandatory Food and Grocery Code cover?
According to the ACCC, it applies to large grocery businesses, retailers or wholesalers whose supermarket or grocery wholesaling revenue exceeded $5 billion in the previous financial year. Suppliers to those businesses are covered automatically and don't need to sign up.
How quickly must a supermarket pay my invoice under the code?
The ACCC says suppliers must be paid for accepted products within the timeframe in the grocery supply agreement, and must always be paid within a reasonable time after they provide an invoice. The agreement must also say when you'll be paid and when payment may be withheld or delayed.
Can a supermarket deduct amounts from my invoice?
Generally not to recover a separate amount you owe, which the ACCC calls setting off, unless you've consented in writing or the agreement allows it and the amount is reasonable. Deductions affect invoice finance because the lender advances against what will actually be paid.
Will a lender fund invoices to a major supermarket?
Usually, and often on good terms, because large grocery businesses are reliable payers. Lenders will still check your supply agreement, your history of deductions and credits, and how much of your total ledger depends on one buyer.
What if a supermarket rejects a delivery?
Rejected goods usually aren't payable, so any invoice for them drops out of your funding. Your grocery supply agreement must set out when the buyer can reject groceries, so know those rules and keep delivery records that prove what was accepted.
Can I use invoice finance before I've delivered anything?
No. Invoice finance needs a valid invoice for accepted goods. For ingredients, packaging and production before delivery, look at working capital, inventory or purchase order finance instead.