Quick answer
When a supplier moves you from trade terms to cash on delivery, the next order suddenly needs paying before it ships — often with no notice. Business funding can cover that first COD order, and smaller unsecured amounts can sometimes be funded the same day. The longer-term goal is to keep stock flowing while you rebuild terms, so size funding to the gap COD creates, not the whole account.
Key points
- A COD switch turns a future bill into a today bill — the deadline is the next dispatch.
- The real gap is the terms you lost: roughly one cycle of supplier purchases.
- Ask the supplier exactly what will restore terms, and get it in writing.
- Smaller unsecured amounts can sometimes be funded the same day; larger amounts with property up to $5m are possible within 24–48 hours.
- Deadline
- Next order dispatch
- Gap to fund
- About one terms cycle of purchases
- Unsecured range
- Typically $5k – $500k
- Credit check to ask
- None
Trade terms are a quiet form of finance. When a supplier lets you pay 30 days after delivery, they’re funding a month of your stock. So when they write to say “from now on, cash on delivery”, they’ve effectively called in that funding — and the next order becomes a deadline.
This page is about getting that next order out the door, and then getting terms back.
Why has the supplier gone to COD?
Before you fix the money, understand the reason. Common ones:
- Late payments on your account, even if they were small or one-off
- A larger order than the supplier’s credit limit for you allows
- A change on their side — new credit insurance, new ownership, a tighter policy across all customers
- Your industry being seen as higher risk, such as construction during a downturn
- Information about your business they’ve seen, like an ATO debt disclosure or a court action
Ask them directly, and ask what would bring terms back. Get the answer in an email. Often it’s simple: “pay COD for three months on time and we’ll review.”
What does the COD switch actually cost in cash?
Think of it this way: the old terms were giving you about one cycle of purchases for free. If you normally buy $40k a month from this supplier on 30-day terms, moving to COD means finding roughly $40k up front, on top of your normal outgoings, before the first order ships.
That one-cycle gap is what you’re funding. After that, you’re paying as you buy — and the gap stays the same size until terms return.
What’s realistic by timeline?
| When dispatch is | Realistic options | Notes |
|---|---|---|
| Today or tomorrow | Smaller unsecured amounts, same day possible; $20k – $250k possible same day with property | Ring early; confirm the supplier will dispatch on remittance |
| This week | Unsecured cash-flow funding, typically $5k – $500k | Sized on turnover and bank statements |
| Ongoing | Line of credit sized to one cycle of purchases | Draw as you order, repay as customers pay |
| Larger accounts | Property-secured, up to $5m possible within 24–48 hours | Suits big wholesale or import accounts |
When you’re ready, send a 60-second enquiry or ring 1300 752 188.
What to have ready when you call
- The supplier’s COD notice and the next order’s pro-forma invoice — see proof of the deadline
- Your typical monthly purchases from that supplier
- The dispatch date and whether a remittance advice is enough or they need cleared funds
- Business bank statements and ABN or ACN
- Who your customers are and when they pay — this is how the facility gets repaid
- Verified supplier bank details if funds are going straight to them
Should you change suppliers instead?
Sometimes that’s right, but rarely within a deadline. A new supplier will usually want COD or a deposit from a new customer too, and switching takes time you don’t have. Most businesses are better off keeping the existing relationship, paying COD reliably, and asking for terms back.
How do you get terms back?
- Pay every COD order on time, without having to be chased.
- Ask for a review date — three or six months is common.
- Share something that helps them — recent financials, or evidence that the issue that caused the switch has been fixed.
- Ask for partial terms first, such as 14 days or a credit limit for part of the order.
- Keep the conversation going. Suppliers deal with plenty of accounts; a short, polite reminder at the review date helps.
The asking for more time guide has more on negotiating with suppliers before things get to COD.
An illustrative COD switch
Illustrative example only — no real business. A bathroom renovation company buys tiles and fixtures from one main wholesaler, about $55k a month on 30-day terms. After two late payments during a slow winter, the wholesaler moves it to COD with a week’s notice. The next order — for three jobs already booked — is $48k.
The company’s own customers pay progress payments, so the cash does come in, just later. An unsecured facility of roughly one month’s purchases covers COD while the company pays reliably for four months. When the wholesaler restores 30-day terms, the facility is paid down and kept as a buffer.
Should the facility pay the supplier directly?
Usually that’s the cleanest arrangement while you’re on COD. The supplier sees payment arriving before dispatch, and you avoid a last-minute transfer from your own account. Before the first payment, confirm the supplier’s bank details by phone using a number you already have, and ask whether they need cleared funds or will release goods on a remittance. Those two answers decide how early the payment needs to be made.
Does a COD switch affect other suppliers?
It can, if word travels or credit reporting picks up late payments. Paying every other supplier on time while the switch is in place protects the terms you still have.
Keep the next order moving
A COD notice is stressful, but the fix is usually straightforward once the gap is funded. Asking what’s possible won’t involve a credit check, and we don’t push your details out to a list of lenders — one team looks at it and a real person calls you back.
Please be accurate on the enquiry form about your monthly purchases, the dispatch date and how your customers pay, so we can match you to an option that keeps stock flowing. Or ring the Deadline Desk on 1300 752 188.
How it works, step by step
- 1
When the notice arrives
Ask the supplier why, for how long, and what restores terms. Confirm the next dispatch date.
- 2
Same day
Work out the gap: the purchases you'd normally pay in 30 days now due upfront.
- 3
Before dispatch
Ring or enquire. Arrange funding for the COD orders until terms return.
- 4
Following months
Pay on time, show the supplier your records, and ask for terms back.
Frequently asked questions
Why do suppliers switch customers to cash on delivery?
Common reasons are late payments, a larger-than-usual order, a change in the supplier's own credit insurance or policy, or concern about the customer's industry. Asking directly helps you understand how to get terms back.
How much should I borrow to cover COD?
Roughly the purchases you'd normally make in one terms cycle with that supplier, because that's the cash the old terms were providing. Borrowing far more than that adds cost without solving anything.
Can the loan pay the supplier directly?
Often, yes. Paying the supplier directly from the facility can be quicker and gives them confidence. You'll need verified payment details.
Will a COD switch hurt my chances of getting funding?
Not on its own. Lenders look at your trading, bank statements and the reason for the switch. Explaining it honestly helps.