“Cash is king”, as some say.
And for good reason, since many factors of running a company rely on this liquid asset. As 2025 completes its final fiscal quarter, a few things are prompting the need for cash, including actions to drive growth, technology investments, and meeting order demand for the holiday shopping season.
High on the list of why strong cash flow is advantageous to a company is the financial flexibility it gives them. Strengthening liquidity empowers businesses to actively spot growth opportunities and pursue them, or it can mean pivoting when needed due to changing trade policy and tariffs.
One way a company can strengthen their liquidity position is by utilizing trade finance, or a type of financing where a company sells their receivables to a third-party financial partner in exchange for cash.
Trade finance is used by exporters, importers and others engaged in international trade to execute efficient cash flow management and facilitate growth abroad.
Let’s take a look at what’s happening in the business climate and why cash matters.
Holiday shopping comes early
The holidays are around the corner, and retailers haven’t missed a beat in stocking their shelves for the holiday shopping rush.
Deloitte’s “2025 Retail Holiday Buyer Survey” revealed that respondents placed over half of all their holiday orders by the end of May, choosing to frontload their inventory for the season. May proved to be nearly two months earlier than last year based on the 2024 version of the survey.
The survey also shows that,
“nearly 50% of surveyed retail buyers said they plan to increase sourcing from new vendors, with an average of 35% of holiday orders moving to new suppliers or countries.”
Retailers may be stocking up earlier this year and executing new sourcing strategies, but one thing is staying constant – working capital is a must to get products in store for the holiday season.
To fill holiday orders placed by retailers and buyers, suppliers require ample cash to procure raw materials, increase production capacity, and for other operational costs. Fluctuations in seasonal demand, as is seen with ramped up sales ahead of the holidays, require flexible financing that can grow with the rise in order volumes.
Trade finance does just that, providing scalable funding that accommodates seasonality. In fact, 80-90% of global trade depends on trade finance today.
Importantly, trade finance, which is designed to bridge cash flow along the supply chain and close any cash gaps, helps facilitate favorable (and extended) payment terms between international buyers and suppliers, so suppliers can get paid upfront and importers and retailers can enjoy longer windows to settle their invoices.
With retailers front loading orders 2 months ahead of the typical schedule and reconfiguring their supply chains, having greater access to cash through trade finance allows businesses to sidestep cash flow disruptions, stay nimble, and make necessary decisions in real time, without the worry of liquidity constraints.
AI & automation
AI is no longer some remote new technology on the block. It is here to stay, and there’s a resounding theme that has come with it: either adopt this new breakthrough technology or potentially risk becoming obsolete.
CEOs have gotten the memo.
In leading audit firm KPMG’s recently released “KPMG 2025 Global CEO Outlook”, CEOs expressed their commitment to AI. The survey revealed “over seven in ten CEOs (71%) say that AI is a top investment priority.”
Company enhancements don’t come free. Investing in AI and automation takes liquidity to both implement the technology into operations and upskill and train staff. We can already see this in the case of manufacturing, where automation is increasingly being implemented into factory production lines.
Take Sharpie for example. The marker maker, which nearly moved their entire supply chain to the U.S. save felt tips from Japan, is said to have largely automated production of their namesake pens, as reported in the Wall Street Journal. Sharpie employees, rather than assembling the writing instruments themselves, have taken on the role of supervising production lines.
While Sharpie is a case of both automation and onshoring their supply chain, the idea here is that companies are continuing to make strategic decisions that refresh operations.
Having a position of financial flexibility afforded through trade finance can be helpful while navigating the new business climate.
Financing bigger AI investments, which promote product forecasting and supply chain optimization, may indeed require other sources of capital, but factoring receivables via trade finance can help free up cash flow to support other core functions of the business.
Freeing up cash flow can also be indirectly beneficial for companies involved in mergers & acquisitions and other partnerships, which can be capital intensive undertakings. One major partnership just announced is OpenAI’s partnership with chipmaker AMD.
Case in point: making strategic moves for your company hinges in part on available liquidity, which is what trade finance is designed to do – enhancing a company’s cash levels.
Getting comfortable with the unknown
In 2025, U.S. tariffs have been game changing for international trade. Companies have had to embrace pivoting in one way or another. In some cases, that has meant moving production from Country A to Country B to avoid high import duties. In other cases it has meant gaining market share in new export markets.
When it comes to tariffs, companies have pledged to raise consumer prices as a last resort, after already trying out different strategies.
The theme of uncertainty is now part and parcel to leading a business. While tariffs dominate international trade, other events have shaken up the trade world in recent history like Covid 19, limited shipping capacity on the Panama Canal, and the Red Sea crisis.
Trade finance: the liquidity enhancer
Trade finance is a set of financial instruments used to strengthen liquidity and protect against trade risk, facilitating secure cross-border trade. It is useful for manufacturers, exporters, importers and others engaged in international trade or buying and selling at home.
Here’s how it works. Through export factoring, a type of trade finance, a company can sell its unpaid receivables to a third-party financial provider in return for cash. This mechanism allows suppliers to receive payment for their orders right away, rather than having to wait the 30+ days common in today’s payment terms.
Export factoring allows companies to enhance their liquidity, improve cash flow, achieve financial flexibility, and drive sustainable business growth.
In some cases, it also includes credit protection, ensuring payment to the supplier in the case of buyer default, and collections services, streamlining payment receipt in foreign markets. Both credit protection and collections are set up by the third-party factoring partner.
While export factoring focuses on cash flow for the supplier, supply chain finance optimizes working capital for the entire value chain. Supply chain finance arrangements are typically initiated by the buyer, and guarantees early funding for the vendor while allowing the retailer to enjoy longer payment terms – and hold onto their cash.
In essence, both export factoring and supply chain finance are win-win solutions for buyers and suppliers to negotiate more favorable payment terms and optimize liquidity levels.
Financial flexibility in today’s shifting trade environment
International trade and the overall business climate are experiencing a lot of change, from AI adoption, to shifting supply chains, to new trade policies dictated in large part by U.S. tariffs.
Given shifting supply chains, accelerated purchases by retailers, and the looming threat of trade uncertainties, financial flexibility is more valuable than ever.
By monetizing receivables through trade finance and eliminating the long wait of payment terms, companies can access cash to make decisions in real time. This fast funding gives exporters and manufacturers the leeway to adapt and stay nimble when new growth opportunities arise or if any headwinds shake up the international trade climate and they need to play defense – and offense.
In times like these, where business conditions can change at a moment’s notice, maintaining strong liquidity is a competitive advantage for companies to stay nimble and execute business decisions, fast.
Factoring and trade finance are useful financial solutions to generate immediate liquidity and protect and elevate your business, now and in the future.
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