Business finance for distilleries

Why distilling has the longest cash cycle in drinks

Few businesses tie up cash as long as a distillery. The grain, botanicals or other raw materials and the casks are bought now; the new-make spirit is then laid down to mature — often for years before whisky, aged rum or a cask-finished gin can legally or commercially be sold. Throughout that wait, the value sits in a warehouse as stock, not in the bank, while every overhead carries on.

Rent or mortgage on the distillery and bonded warehouse, energy, staff, insurance and the cost of casks all run continuously, and duty falls due when spirit leaves bond. So a distillery can be building genuine, appreciating value in its racks while its current account feels permanently stretched — the classic mismatch between long-dated stock and here-and-now costs.

Where the cash gets locked

Distillery cash concentrates in places a short cycle never sees:

• Maturing stock. Spirit ageing in cask is capital you can't touch until it's ready and sold — months to years out.
• Casks and raw materials. Both are paid for upfront, at the very start of a cycle that pays back much later.
• Continuous overheads. Warehouse, energy, staff and insurance run the whole time stock sits ageing, with no matching income.
• Duty on release. Excise duty on spirit leaving bond is a significant cash event, due around the point of sale.

What distilleries use finance for

A common use is working capital for ingredients, casks and laying down stock — funding the raw materials and barrels for a production run whose return is years away, so the distillery can keep filling casks while older stock matures. This is finance bridging a deliberately long cycle, not covering a shortfall.

Distilleries also borrow against a confirmed trade order — a wholesale, export or retail contract for mature stock — funding bottling, packaging and duty while waiting on the customer's payment terms. Other uses include equipment and capacity (a still, bottling line or warehouse fit-out), seasonal build-up for the gifting peak, and bridging slow-paying accounts. The healthiest borrowing ties to a confirmed order, or to production whose value is evidenced by stock already maturing and demand you can show.

What to weigh before you borrow

Run the decision against your real distillery economics:

• Match the term to the cash event. Don't fund years-out maturation with a facility that demands repayment before any stock is sold — align borrowing to a confirmed order or a near-term release.
• Evidence the demand. Laying down more stock only pays if it sells; size production to contracts and a realistic market, not optimism.
• Account for duty. Factor the excise cash event into the plan so a release doesn't catch you short.
• Total repayable and early settlement. Get the full figure and check you can clear early if a strong order lets you.

This is general information, not advice on your accounts — pressure-test it against your own figures or with your accountant.

How short-term company finance fits — no personal guarantee

Credicorp lends to the limited company behind the distillery, with no personal guarantee — the facility is the company's liability, so your personal assets aren't pledged. As an exempt business lender providing working capital rather than regulated consumer credit, the assessment is built around how the business trades and what's contracted, which suits a producer whose wealth is locked in maturing stock.

For a defined need like a still, bottling line or a cask purchase tied to a confirmed order, a business loan gives a clear lump and schedule. For the rolling cost of ingredients, casks and bridging trade terms on released stock, the revolving Credicorp Flex line lets you draw against orders and repay as customers pay, paying only for what you use. You can apply online to see indicative terms first.