Winning a major supply contract with a large retailer should be a breakthrough moment for a small business. But without proper cash flow planning, it can quickly become a liability rather than an opportunity.
“If you don’t plan for the cash flow impact of a new contract – particularly the payment terms – it can sink your business rather than grow it,” says Angus Sedgwick, CEO and founder of invoice financier OptiPay.
Opportunities often arrive before businesses are financially ready to support them. And in today’s environment, that gap is widening.
Large retailers are well known for extended payment terms, often stretching to 60 or even 90 days. For suppliers, that creates a structural mismatch: they must fund production, inventory, and labour upfront, while revenue is delayed.
For many SMEs, growth is not the solution – it’s the risk.
Sedgwick says the issue is not demand, but timing.
“Businesses often have significant capital tied up in receivables but lack the liquidity to fund growth. I speak to founders every day who are turning away new opportunities, not because they aren’t profitable, but because they simply don’t have the cash to fulfil them.”
As businesses scale, they invest ahead of revenue – buying stock, hiring staff, or expanding operations – while waiting weeks or months to be paid. That timing gap is where many come undone.
“A business can double its orders overnight, but that can also double its funding requirement. If you haven’t planned for that, growth becomes unsustainable.”
Despite this, many businesses pursue contracts without fully modelling the cash flow implications.
“I’ve asked business owners how they planned to fund a major contract, and some have told me they didn’t expect to win it, so they didn’t plan. Others assume it will work itself out or that funding will be available when they need it.”
In reality, access to funding is not guaranteed – particularly for early-stage businesses or those already under financial pressure.
At the same time, external pressures are intensifying the problem.
The Australian Taxation Office has taken a firmer stance on overdue GST and PAYG liabilities, reducing flexibility for businesses that have historically relied on delayed payments as a form of working capital.
For businesses operating on an accrual basis, this creates additional strain. GST is payable when revenue is recognised, not when cash is received – meaning businesses can be required to remit tax on income they have not yet collected.
Layered on top of this is the introduction of PayDay Super.
From July, employers will be required to pay superannuation contributions within days of payroll, rather than quarterly. While the change has been signalled for some time, many businesses are unlikely to be fully prepared.
“The shift to PayDay Super will materially accelerate cash outflows,” says Sedgwick. “For businesses already operating with tight margins and long receivable cycles, that’s going to create real pressure.”
These structural challenges are compounded by rising input costs and ongoing cost-of-living pressures, which continue to squeeze both margins and consumer demand.
“The fundamental issue hasn’t changed – businesses still have a timing gap between when they spend and when they get paid. What’s changed is that everything around that gap has become more expensive.”
To better understand these dynamics, OptiPay has partnered with Inside FMCG to produce the report Cash, Concentration and Control: The FMCG Reality in 2026.
The report highlights that resilience in FMCG is not driven by scale or growth alone, but by how effectively businesses understand and manage their cash cycle.
In a sector dominated by a small number of major retailers, supplier exposure is often highly concentrated. Changes in payment terms, promotional activity, or ordering patterns can have an immediate and significant impact on working capital.
“When a large portion of your revenue is tied to a small number of customers, even minor changes can flow directly into cash flow pressure,” says Sedgwick.
At the same time, many businesses underestimate the cumulative impact of smaller, recurring costs.
“Rebates, deductions, freight volatility, labour cost creep – these don’t usually trigger alarm bells individually. But over time, they quietly erode cash flow and extend the funding gap.”
The report concludes that businesses that remain resilient are those that take a deliberate, structured approach to managing cash.
This includes understanding cash conversion cycles, identifying pressure points early, and aligning funding strategies with the realities of long payment terms.
Improving cash flow is not about slowing growth or avoiding opportunity. It’s about funding growth in a way that reflects how cash actually moves through the business.
“Cash resilience isn’t built through a single big decision,” says Sedgwick. “It comes from consistently managing how cash flows through the system – tightening where it leaks, smoothing where it builds up, and making sure funding aligns with reality.”
In an environment where small shifts in payment terms can materially increase funding requirements, working capital discipline is becoming a defining competitive advantage.
- Download the full report to uncover the five critical actions FMCG suppliers must take to stay cash-resilient in 2026.
