- July 15, 2025
- Posted by: admin
- Categories: Working Capital, Blog
In the dynamic global trade sector, exporters usually encounter one major problem: receiving huge orders, but lacking the necessary funds to immediately process the order. This is where working capital can change everything. When used wisely, it assists companies in seizing larger opportunities, establishing long-term relationships, and expanding more quickly without straining their budgets.
This article will explain how the use of working capital can help exporters fulfil large orders without incurring financial difficulties.
What is Working Capital?
Working capital refers to the sum of money that a company incurs during its daily operations. It is the discrepancy between current liabilities and current assets. In simple terms, it shows the amount of funds that an enterprise has available to it to run its day-to-day operations.
In the case of exporters, working capital consists of the money required to purchase raw materials, salaries, transport bookings, and customs documents, before receiving payment from the buyer.
What is the role of working capital for exporters?
Export orders are normally accompanied by longer payment cycles. There are cases when you have to wait 60 to 90 days, or even more, before the foreign buyer makes payment to you. At this time, your business will require cash to keep going. Lack of sufficient working capital also makes it difficult to fulfil huge orders despite the high demand.
Smart utilization of working capital may assist exporters in –
- Accept larger orders without any delays.
- Make timely payments to suppliers and employees
- Avoid payday loans or emergency borrowing
- Ensure your credit score stays high
- Utilise trade discounts or quantity offers
Plan for Large Orders
Planning is the initial step to utilizing working capital intelligently. Know the expenses before committing to a big export order. Split it into:
- Raw materials buying.
- Cost of processing or manufacturing price
- Transport and packaging
- Transport tariff and customs taxes
- Real estate agent fees (any)
- Buffer costs and delays that may happen
The next thing to do is to compare the amount you will spend with the amount of working capital you possess. In case of any gap, make an arrangement on how to fill it.
Maintain a Healthy Cash Flow
The foundation of effective working capital is set by cash flow. Though you may be profitable on paper, a cash shortage can bring your operations to a halt. The following tips can be used to improve cash flow:
- Submit invoices once goods have been shipped
- Make regular follow-ups with buyers to pay
- Do not offer very long credit periods
- Be careful with due bills and payments
There is also invoice discounting or bill factoring, whereby early payment can be obtained from banks or other financial institutions. In this manner, you can free up money stuck in invoices without having to wait until the buyer pays.
Use Working Capital for the Right Purpose
The biggest error that some companies commit is investing the working capital in long-term assets such as machinery or land. This ties up cash, and liquidity is decreased.
Your operating capital must be used to:
- Purchases of raw material
- Labour costs
- Shipping and transport
- Documentation and clearance charges.
- Emergency expenses (such as last-minute increases or setbacks)
Maintain working capital at all times for short-term operational requirements.
Negotiate Better Terms with Suppliers
To be able to accept larger orders, attempt to work out longer credit terms with your suppliers. For instance, when your supplier allows you 30 days to pay, but your foreign buyer pays you in 60 days, that allows for better capital management. This eases the working capital requirements.
Also, request a volume discount when placing large orders. You can apply the saved money to other operating requirements, and you will not be dependent on outside financing so much.
Use Export Financing Tools
There are a number of financing options specifically for exporters. These are used to assist in the management of working capital gaps, as well as the completion of large orders without any fear. Useful tools are:
- Pre-Shipment Finance
This is a short-term loan provided before pre-shipment to assist with production, packaging, and transport costs. You may pay it back once the buyer makes payment after delivery.
- Post-Shipment Finance
When you have already dispatched goods and are yet to receive payment, this financing helps you meet your costs until payment is received.
- Export Credit Guarantee
Exporters can use this to hedge against defaulting payments. Banks could be more honest with working capital loans with this coverage. These are used to ensure that the exporters are able to keep the business moving without dipping into their own pockets.
Build a Working Capital Buffer
Similar to personal savings, a business ought to have a working capital buffer. A last-minute delay in the shipment, customs, or overseas payments may strain your cash flow.
Even a tiny reserve, like 10% to 15% of your usual order size, can help you deal with problems that come up at the last minute and make sure you can take advantage of significant chances with little risk.
Track Inventory and Improve Its Management
Excessive inventory implies that your money is unutilised in your warehouse. Insufficient inventory will result in a possibility of missing deadlines. Wise inventory management will keep you with exactly enough inventory to meet customer demand within a short time.
Use inventory tracking tools to understand-
- What are slow-moving materials?
- Which ones are always required
- What can be done to limit waste and destruction?
Inventory optimization will directly enhance your working capital effectiveness.
Smart Working Capital for Export Growth
Accepting bigger orders to export is an excellent business expansion idea, but only when you use your available capital wisely. With a little planning, cash flow management, export finance products, and the right partner, you can satisfy large demands without straining your finances.
In the current competitive world market, it is not enough to win orders and be considered successful, but it is also important to deliver the orders efficiently. Smart working capital management allows you to say “yes” to the great opportunities and deliver with certainty.
When you grow quickly, working capital may become complicated. Having a good financial partner to deal with is useful, one who is aware of the problems associated with exporting and can provide specialized solutions. Credlix is a notable name in the field, offering specialized working capital solutions for exporters. Whether it is invoice discounting, supplier payments, etc, the platform allows businesses to have a seamless cash flow and grow without any financial strains. Credlix allows you to accept larger export orders and grow your business with confidence.