Are international deals burning your company’s cash flow? If you’re an SME with a global reach, you’re probably familiar with the challenges of managing cash flow while balancing international transactions. Delayed payments, volatile currency markets, and unexpected costs can all strain your liquidity. Without effective strategies, these risks can escalate and even threaten your growth.

But the good news is, with the right tactics, you can safeguard your cash flow and improve your financial stability. In this article, we’ll explore five key strategies to help you stay on top of your cash flow when engaging in international trade.

1. Use Trade Finance to Bridge Payment Gaps

When you’re importing or exporting goods, timing is everything. Suppliers often expect payment before goods are shipped, while customers might pay you 30, 60, or even 90 days after delivery. This creates a cash flow gap that can leave your company short on liquidity.

How to solve this: Trade finance solutions like Letters of Credit (LCs), documentary collections, or supplier financing can bridge that gap. LCs, for example, provide a guarantee that your supplier will get paid on time, while you can wait for your buyer’s payment. This protects your cash reserves and ensures that your suppliers trust you in future deals.

Pro Tip: Negotiate with your bank or a trade finance provider to set up a revolving LC, which lets you use the same credit for multiple transactions, simplifying the process for regular orders.

2. Negotiate Favorable Payment Terms with Suppliers and Buyers

Every international deal involves negotiations, and payment terms should be a key part of those discussions. By securing more favorable terms, you can improve your cash flow without straining relationships with suppliers or buyers.

How to solve this: Ask suppliers for longer payment terms (e.g., 60-90 days), which gives you more time to sell the goods and receive payment from your customers. On the flip side, try to secure upfront payments or milestone payments from your customers. This can drastically improve your working capital cycle.

Pro Tip: Always include a payment term clause in contracts to avoid disputes and align expectations. For example, specify a penalty for late payments to encourage on-time settlement.

3. Hedge Against Currency Risk

Currency volatility can be one of the most unpredictable factors affecting your cash flow. A simple shift in exchange rates could lead to significant losses, especially when dealing with high-value goods.

How to solve this: Hedging tools like forward contracts or currency options help lock in exchange rates and protect your business from adverse currency movements. With a forward contract, you can agree on an exchange rate for a future date, ensuring that your costs stay fixed, regardless of fluctuations.

Pro Tip: Consider working with a foreign exchange specialist who can help you manage currency risk over longer periods and offer strategic insights.

4. Streamline Your International Payment Process

International payments come with hidden costs and delays, and these inefficiencies can erode your margins. From high banking fees to unpredictable transfer times, these bottlenecks affect both your bottom line and cash flow predictability.

How to solve this: Leverage fintech platforms that specialize in low-cost, fast international payments. Many platforms offer better exchange rates and lower transaction fees than traditional banks, which can save you thousands in the long run.

Pro Tip: Look for platforms that allow multi-currency accounts. This way, you can hold foreign currency and make payments at the most favorable time, reducing your exposure to sudden currency shifts.

5. Implement Effective Cash Flow Forecasting

Many SMEs struggle because they don’t anticipate future cash flow issues. Without effective forecasting, you can’t make informed decisions on when to spend or when to hold off.

How to solve this: Invest in cash flow forecasting software or work with your finance team to create detailed forecasts that take into account payment schedules, currency fluctuations, and trade finance costs. Regular forecasting allows you to identify potential shortfalls early and take preventive measures, like negotiating terms or securing finance.

Pro Tip: Use your historical data from previous transactions to identify trends in your cash flow and build forecasts that are based on real-world patterns, not just assumptions.

Conclusion: How Tulyp Can Help

International trade comes with its fair share of risks, but with the right strategies, SMEs can protect their cash flow and navigate these challenges confidently. From securing financing to hedging currency risk, each step you take will help keep your business running smoothly, even when global market conditions fluctuate.

Need help managing cash flow in your international deals? Tulyp can support you with:

• Tailored trade finance solutions to bridge payment gaps and ensure liquidity.
• Currency risk management tools to protect against exchange rate volatility.
• Low-cost, fast international payment solutions that streamline your transactions and reduce fees.
• Expert cash flow forecasting tools and insights to help you anticipate and plan for future financial needs.

Tulyp is here to make international trade easier, more predictable, and less stressful. Contact us today to learn more about how we can help your business thrive globally.

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