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.

The post Strengthening liquidity is crucial in today’s trade environment – here’s how your company can free up cash flow appeared first on Trade Ready.

“Who’s paying them?”

Small businesses in the U.S. have reportedly been hit hard by the tariff announcements. Many of them import goods from overseas and are the ones responsible for paying the tariff costs, which are essentially taxes placed on foreign products brought into the import country. Big-box retailers like Walmart don’t face this same financial burden. They have the competitive advantage and the leverage to pass tariff expenses onto their overseas suppliers if necessary.

Amid new trade policies, buyers and suppliers are reviewing the terms of their trading partnerships. Some are negotiating proactive solutions in response, including how to address payment and any new added costs from tariffs.

Whether it’s the overseas supplier who will have to absorb tariff prices or the importer who ends up covering them, trade finance can be used to protect and improve cash flow for both buyers and sellers across the international supply chain.  It’s also a means for buyers and sellers to negotiate more favorable payment terms with one another, so all players can proceed with strong, stable cash flow when doing cross-border business.

Win-win tool for dealing with tariffs

For businesses trading internationally, sorting out payments during the tariff rollouts is likely a top priority. Small, midsized and larger companies are all involved in this new trade playbook and are all part of getting a product to market.

In this trading web of exporters, importers and other supply partnerships, someone will have to either absorb, pass on or split tariff charges.

Just like it has been during other supply chain events, including COVID-19 and geopolitical disruptions, trade finance can be a solid tool to help companies bridge cash flow between raw material procurement, production and payment receipt. It can be used to finance longer payment terms between the buyer and seller, so that sellers get funded right away while the buyer can pay at a later date.

Fun fact: Trade finance already supports 80-90% of global trade, according to the World Trade Organization. This financing ensures that both parties in a commercial transaction have the cash they need, especially if prices spike, like in the case of tariff charges.

Financial flexibility during times of transition

Tariffs are determined by the country of origin and the type of product being imported.

Right now, a lot of companies are talking about the uncertainty tariffs are causing for their business. Some however have anticipated tariffs and have already adjusted their business strategies accordingly, including price adjustments with suppliers, inventory stockpiling, diversifying their sourcing and supply chains, and focusing on additional markets outside U.S.

Those companies that haven’t already gotten the ball rolling on these adjustments are likely in the process of considering their options now that tariffs have shaken up trade norms.

As companies reassess their tactics, trade finance is a flexible solution that can adapt to a business’ evolving needs.

If a company, for example, shifts sourcing from one country to another, or partners with retailers in new markets, then a trade finance firm can help facilitate seamless transactions between buyer and seller – including the payment terms between the two.

The mechanics behind trade finance

Trade finance is a set of financial tools that improve cash flow, mitigate trade risk, and unlock business growth.

One type of trade finance is known as export factoring. Using export factoring, companies can sell their receivables or invoices to a financial intermediary. The financial intermediary then provides up to 90% of the invoice amount to the company upfront and in cash.

The concept behind export factoring is that businesses choosing to use it can get paid right away, rather than having to wait months to collect payment from their buyers.

For reference, recent data showed that a large U.S. buyer takes an average of 54.7 days to pay their invoices. Businesses can be strained financially if they have to wait that long to get paid.

Aside from the immediate liquidity export factoring provides, non-recourse export factoring also includes credit protection that ensures you get paid even if your customer defaults. Collection services are also part of export factoring arrangements, where the trade finance company acts as an extension of a business’s “back office”. With collections services, the trade finance company handles payment collections and supports exporters as they navigate and work with buyers in foreign markets.

Supply chain finance is another type of trade finance, but it is often initiated by the buyer, rather than the seller. Through supply chain finance, a retailer can offer its vendors early funding, equipping them with the cash to maintain operations and keep up with orders.

Like export factoring, supply chain finance helps suppliers get paid faster while giving buyers longer windows until payment is due. This dynamic ultimately allows buyers and sellers to have more cash on hand, a crucial element for general working capital – and with the handling of tariffs.

The upshot

As the tariff and international trade landscape evolves, trade finance, and the age-old technique of factoring your receivables to secure payment upfront can prove to be the right antidote to optimize cash flow.

No matter where the tide turns next, trade finance tools offer a potential safety net for companies engaged in international trade.

The post How to use trade finance tools to gain flexibility during trade policy upheaval appeared first on Trade Ready.

Attacks on cargo ships in the Red Sea in recent months have caused vessels to reroute around the Cape of Good Hope in Africa, producing longer and costlier trips. Happening simultaneously, the lower water levels along the Panama Canal have limited the number of cargo ships that can pass through the waterway each day.

Supply chains were also rattled not so long ago with the collapse of the Francis Scott Key Bridge in Maryland, which meant other U.S. ports had to step up and take on the shipping activity that the Port of Baltimore normally manages. There has also been a reported shortage of truck drivers stateside.

With all of these external factors in play – from public health crises to weather patterns to political discord – how can we protect our supply chains and – dare we say – even improve the relationships among selling and buying partners?

Export factoring.

Export factoring is a strategic tool to ensure cash flow

Trade finance is a set of financial tools that both improves a business’ cash flow and reduces its credit risk. Two well-known types of trade finance products are export factoring and supply chain finance.

Export factoring is when a financial firm buys a company’s receivables and advances them the majority of the invoice amount up front in cash (up to 90% in some cases).

This type of funding can also include credit protection and collections services. When this is the case, this full package is known as non-recourse export factoring.

Though manufacturers tend to choose export factoring services and retailers initiate supply chain finance with their suppliers, both umbrellas of trade finance achieve the same goal: better access to working capital all along the supply chain. A reliable source of working capital is critical to keeping operations moving along, despite any headwinds in global trade.

The waiting game

In today’s global trade landscape, there is often a wide gap between when an invoice is issued by the seller and when payment is submitted by the buyer. This is normal, though it can be a strain on supplier cash flow.

Payment terms between buyer and seller can be up to 3 months in some cases, meaning buyers don’t have to settle their invoices until 90 days after they have placed their order.

In fact, according to The Hackett Group, it takes large U.S. buyers an average of 54.7 days to pay their bills.

Factoring cuts this waiting period and converts unpaid invoices into cash up front. This method can be looked at as a “win-win” for both the supplier and the buyer, since the supplier receives additional liquidity right away while the buyer can enjoy extended periods until payment is due.

Why does getting cash right away matter to a supplier?

Well, in short, suppliers have vendors to pay too, and they can’t do so on schedule without sufficient capital on hand. By releasing the capital locked in their receivables, suppliers can pay their vendors in a timely manner, respecting these vital relationships needed to procure raw materials so they can continue to fill orders smoothly.

Besides paying their bills, manufacturers can also be looking to grow or expand their operations and customer base, which requires enough working capital to achieve these business goals. Many of these new buyers in new markets are also looking to negotiate longer credit terms, an arrangement that is attainable with trade finance bridging the cash flow gap.

Why do longer payment terms matter for buyers?

Trade finance allows buyers to optimize their working capital too. Without the pressure to pay suppliers right away, large retailers can invest in their operations, product offerings, footprint, employees, and their own growth and expansion aspirations. Having ample time to settle their bills gives retailers the opportunity to focus on their core activities and values.

Credit protection and collections services

Now, in the case a buyer happens to go bankrupt, trade finance still ensures that the buyer’s supplier gets paid. This is because trade finance, or non-recourse export factoring, includes credit protection to protect against non-payment in such cases of default.

This inclusion of credit protection allows suppliers to conduct business with peace of mind, without the worry of not getting paid.

These suppliers also benefit from the collections services that come as part of trade finance packages, which means the trade finance company is responsible for collecting payment from the buyer, giving suppliers more time to invest in their business.

The upshot

Cash is a major catalyst in allowing supply chains to function properly and operate smoothly. In a global trade environment that can be affected by everything from political discord to drought, reliable cash flow through trade finance is something a business can count on.

Trade finance provides easy access to cash by turning unpaid invoices into capital within 48 hours of verifying a business’s invoices, in some cases. Importantly, it supports payment cycles that work for all parts of the supply chain while reducing trade risk, allowing for strong, “happy” relationships and global trade dynamics.

The post Export factoring can keep your supply chain running smoothly appeared first on Trade Ready.

While every business is unique, taking inventory of what worked for other successful enterprises, and what didn’t, can help you keep your business on the right track and even boost it to the next level of profitability, growth, and customer approval ratings.

Keep in mind: learning from mistakes doesn’t just apply to our personal lives.

Let’s take a look at common mistakes international businesses make, and how trade finance can relieve some of the financial stresses that come with the territory of being an entrepreneur:

1. Poor cash flow management, the #1 reason small businesses fail

So many parts of running a business rely on a healthy cash flow. Working capital is not only used to cover everyday expenses like payroll and electricity, but it is also needed to pursue bigger plans like growth and expansion into new markets.

There are a couple of factors that can impair cash flow, however, leaving a company with a lower reserve of liquidity than it would like.

In fact, according to a report from Jessie Hagen, previously of US bank, 82% of failed small and medium-sized businesses went under due to poor cash flow management.

Too much growth, too little capital

Growing too much, too quickly, in some cases, can actually be detrimental for a business. Rapid growth may have the adverse effect of drying up cash and might ultimately send a business hurling towards bankruptcy.

This, in fact, happened to the ice cream brand Ample Hills, based in Brooklyn, New York. The company grew from a single local scoop shop to having a footprint of 17 stores nationwide, links with Disney, a presence in grocery retail outlets, and a stamp of approval from Oprah Winfrey, according to the New York Times. Though this brand never ended up expanding overseas, rapid growth without the right support can hurt businesses trading internationally just the same.

Brian Smith, Ample’s co-founder, revealed to the Times, “We made every mistake it is possible to make.”

This included an ill-placed location in Los Angeles and switching up packaging from a traditional round container to a square one. Even with the Ample Hills brand skyrocketing to success, decisions like these ultimately sapped the company’s cash.

Trading with long payment terms in place without the right oversight and support

While the demands of rapid growth may be one culprit for leaving a company cash-strapped, long payment terms with buyers can also drain a company’s liquidity if not managed correctly.

Today, many commercial transactions occur on open account terms, which means buyers are allowed to pay their bills months after an invoice is generated.

Recent data shows that large U.S. buyers take an average of 54.7 days to pay their invoices.

While giving customers the freedom to pay later can help a business win and retain orders, a company must be vigilant of the cash gap that can occur with such terms in place. Many businesses may find themselves needing to pay their vendors upfront, while still waiting on payment for their sales.

Without a keen awareness of the overlap in outgoing and incoming payments, cash flow might be jeopardized.

2. Selling domestically or internationally without having the demand needed to succeed

It can be the aspiration of many growing companies to expand domestically, or even enter new markets abroad. But without the demand overseas or at home, your product may turn out to be a flop.

According to a recent Forbes article titled “Small Business Statistics of 2024”, inadequate market demand is the second most common culprit for business failure.

Inadequate market demand is the second most common culprit for business failure.

“For a small business to be successful, it’s imperative not only to have adequate capital to sustain operations in the early stages but also to ensure there is a consistent and growing demand for its products or services,” the article states.

Given this common mistake, it’s imperative to conduct sufficient due diligence before launching a new product or service. A business must take the necessary steps, like conducting a market gap analysis and gaining a full grasp of the demographics they’re trying to reach, in order to set itself up for success.

3. Skipping credit protection

As we’ve seen in the past couple of years, several big-box retailers have gone out of business. These famously include Bed Bath & Beyond, Christmas Tree Shop, and Lord & Taylor.

When doing business with these large buyers, credit protection can come in handy if bankruptcy is looming for the retailer.

It’s not always easy to predict if a retailer will shutter, but the pandemic taught us that large brands can go bankrupt, and if they don’t fully collapse, then they can still be tardy on their payments to suppliers or skip paying them completely.

How trade finance can help businesses stay the course

Trade finance is a tool that can help businesses better manage their cash flow, reduce trade risk, and accelerate their growth, among other things. Companies of all sizes can take advantage of this financial resource, but small and medium-sized enterprises are especially known to benefit, since traditional banks may require them to meet stricter borrowing criteria.

If a business opts to use trade finance services, here’s how it works:

A financial intermediary will purchase their unpaid invoices and will provide them cash upfront in exchange. This sum of cash will equal up to 95% of the invoice amount.

By receiving this cash advance on the payment they are owed, a business can pay their own supplier on time, or on an earlier schedule. Retailers and other buyers can still enjoy longer windows to pay their invoices since the financial intermediary is able to close the payment gap.

What’s more, trade finance also includes credit protection and collections services.

This means that a business is guaranteed to get paid even in the case of buyer insolvency, as the financial intermediary absorbs the risk in this case and will ensure the business gets paid.

Since running a business requires a lot of focus on marketing, R&D, and customer service, accounts receivable management that comes as part of trade finance packages can take the burden of collecting payment from customers off the business.

The Upshot

Operating a business has its challenges, but it also comes with many rewards. Paying attention to the mistakes that other businesses have made can certainly protect a company from falling into the same pattern.

To get a better handle on cash flow, secure an extra layer of security, and get more freedom to focus on running core business activities, a company can consider trade finance as a solution that can clear hurdles and pave the way for success.

The post 3 common mistakes that cause international businesses to fail – and how to avoid them appeared first on Trade Ready.