Peak season brings apparel businesses their strongest sales. It is also when cash is under the greatest pressure.
Shoppers in America spent $49 billion online on apparel during the 2025 holiday season. Yet apparel brands, importers, and wholesalers paid for much of that inventory months earlier. The average duty on U.S. apparel imports rose from 14.7% in January 2025 to 35.1% by December. On a $1 million shipment, that is an extra $204,000 leaving the business before a garment is sold.
Supplier payments, freight, warehousing, and marketing require cash upfront, while retailer terms and marketplace settlements delay the cash coming back.
The Gap Begins Before the Invoice
Businesses often call this an advance-rate problem: their lender funds only part of an invoice when peak season requires closer to the shipment's full value. But the problem begins before the invoice exists.
A June order may require payments during production, at shipment, and for freight and duties. Financing may become available only after an eligible invoice is created. The goods may sell in November, but customer cash may not arrive until January. The result can be a four-to-six-month timing gap, not a shortfall on a single invoice.
A $1 million factory order placed on 1 June is paid in three stages: $300,000 deposit, $700,000 on shipment, then $400,000 of duty and freight. The retailer's $2.1 million payment arrives on 14 January, 227 days after the first deposit.
There Is a Second Problem, and It Is Less Obvious
You might reasonably object: my facility is asset-backed, so the goods must count for something. They do, but when they become eligible, and how much they unlock, depends on the lender. Some lenders advance against finished goods from the date of shipment, while others wait until the goods reach the warehouse or lend only against raw materials.
Even when the inventory is eligible, the advance rate is typically lower than it is for a retailer receivable. In the example shown above, a 50% advance against the goods’ $1.4 million landed cost makes $700,000 available, leaving the business to fund the other $700,000.
Once the goods are sold and the $2.1 million retailer invoice is raised, an 80% advance makes up to $1.68 million available, i.e. $980,000 more borrowing capacity than the inventory supported. The problem is that it unlocks less capital precisely when the business has already paid its suppliers, freight, and duties. The months when cash is furthest out the door are therefore the months when the borrowing base provides the least support.
A Facility Can Work for Eight Months and Fail for Four
"For most of the year, our facility was enough. But during four peak-season months, we needed funding that covered nearly the full value of our shipments. When our lender could not stretch that far, we had to fill the gap with a smaller, more expensive financing provider."
— Apparel importer, in a recent conversation with our team
Some businesses have the spike built in. In 2007, The Children's Place Retail Stores, Inc. negotiated a $20 million "seasonal overadvance" with Wells Fargo Retail Finance. It was available from 1 July through 31 October for back-to-school and holiday inventory. Outside that window, standard terms resumed. We offer similar seasonal step-ups too. One of our customers, a US apparel design and sourcing business, carries a $50 million facility that steps up by $25 million for peak season.
But a seasonal overadvance raises the ceiling. It does not change the fact that in October your collateral is inventory. Once the factory is waiting and the shipment is ready, the business is no longer comparing lenders. It is buying speed.
What Buying Speed Costs
That $700,000 gap runs 71 days, from paying the factory balance to raising the invoice. Arranged in advance at around 12%, it costs about $16,000. Bought in a hurry at 30%, about $41,000.
A $25,000 difference on one shipment — roughly a seventh of the profit on that order at an 8% net margin. Run three shipments like this in a season and it is $75,000.
The bigger number is usually capacity, not cost. That $700,000 is your own equity sitting inside one order for 71 days. Free it and the same equity carries a second order in the same window. For most importers the real loss is the order they passed on in July.
And there is a worse outcome than paying too much: if repayment starts before the inventory sells, the loan pulls liquidity out exactly when you need it most. It closes one gap by opening another.
What to Do Before the Next Order
If you are reading this in August, your holiday goods are already on the water. The order you can still change is spring.
Three things to do while nothing is urgent:
- Build a timeline for your two largest orders. Real dates, real terms. Your peak cumulative outflow is what your financing has to cover.
- Write down what each of your sources advances, and when. A line that advances 50% against stock and 85% against invoices is two different facilities depending on the month.
- Check when repayment starts against when your retailer actually pays. If repayment lands first, you have moved the gap, not closed it.
Peak season is the most predictable thing on your calendar. What it costs you is not.
