3 tips to Importers and Exporters for the New Year✨

The New Year is commonly associated with personal resolutions. As the year changes from the old one into the new, people resolve to make changes to who they are and what they want to be. Some may want to lose weight. Others may want to save more. Still, others may want to invest in their future, such as by buying a new home.

But businesses should also turn 2023 into a turning point. For all its promise, the year presents several challenges that nearly all businesses must contend with, such as rising prices of goods and raw materials, a possible global recession, and even the emergence of a new COVID-19 variant.

In this volatile, uncertain, complex, and ambiguous (VUCA) world, businesses must also resolve to make drastic changes. This idea applies especially to businesses in the supply chain. Both importers and exporters will need to shift their strategic priorities in order to remain competitive and succeed.

These strategic priorities can be adopted by a business in several ways. They can be incorporated into an organization’s mission and vision, so they factor into the vision-setting of the road ahead. They can be operationalized across key performance indicators or even objectives and key results. They can even just be referenced as sort of a rallying cry across company communications—something everyone should strive toward for the New Year.

No matter how these strategic priorities are rolled out, businesses should make them a point of emphasis across the organization.

Fortunately, there are a few general directions that importers and exporters can strive for in the New Year, taking inspiration from some common personal resolutions.

Strengthen working capital:

One of the most common personal resolutions is the goal of losing weight and getting in better shape. Part and parcel of this are often gaining muscle.

In much the same way, importers and exporters should also strive to increase their own muscle for the New Year. The “muscle” of these businesses is working capital, for it facilitates action. With more working capital, enterprises can rapidly expand the number of business activities that they can engage in, including everything from hiring talent and buying more raw materials to building infrastructure and expanding marketing and sales.

In other industries, improving working capital is easier said than done. In the supply chain space, however, businesses have the option of invoice financing. As a form of trade finance, invoice financing allows both importers and exporters to improve working capital, at no cost or negative impact on their trade partner.

Let’s examine invoice discounting from the perspective of exporters. Unlike in other industries, exporters turn over their goods immediately but are not paid immediately. They often do not get paid for 60, 90, or 120 days. The gap between sending goods and receiving payment, needless to say, puts an enormous strain on their working capital. 

With invoice discounting, however, exporters can upload the export receivable to an invoice financing platform. In as little as 48 hours from the moment of uploading, the exporter can get cash for their export receivable. This opportunity strengthens their working capital, giving them much-needed cash flow as the world teeters on the brink of a recession.

Prioritize win-win relationships

Another common resolution for the New Year is personal growth, perhaps through learning a new skill or accomplishing a long-delayed goal. Businesses should also prioritize all the traditional markers of growth for the New Year, such as revenue, with one caveat: for them to succeed, others do not need to fail.

Business, in other words, does not need to be a zero-sum game. With the emergence of the circular economy, there has been greater emphasis across all areas of business on win-win relationships.

While this notion may sound like business-speak, it is an especially new idea for the supply chain, where importers and exporters have been traditionally pitted against one another, fighting over simple terms. Exporters want to be paid more for their goods. Importers want to pay less for those goods. They have been locked, in short, in the traditional, if unnecessary, the conflict between vendors and suppliers.

This kind of approach is counter-productive. If the world falls into a worse economy in 2023, businesses should not squeeze partners out of a few pennies at the negotiating table. Sure, some will succeed, but this kind of heavy-handed business strategy will backfire. The exporter that an importer demanded discounts from may go out of business, and then be unable to provide the necessary goods.

Rather than push-and-pull over terms, importers and exporters can create a synergistic relationship through invoice discounting. Let’s look at it from the perspective of importers. Rather than fighting for lower prices from partner exporters, importers can simply upload their export receivables to an invoice financing platform. The invoice financing platform will pay the exporter immediately, and then the importer will have longer payment terms to pay it back, in some cases up to 120 days.

Through invoice discounting, both trade partners win, which is a crucial need for 2023: businesses must collaborate in order to thrive.

Invest in the future

Another popular resolution for the New Year is investing. Some may want to save money for a home, others for the college education of their children and still others for retirement. They want to end the year with more assets than they started with.

This should be the goal for importers and exporters alike. While this goal sounds like commonsense—after - which business, after all, does not want to invest in the future?— The current economy may make it difficult. To stay afloat, businesses may be focused on the short term; some may even be concerned about having enough cash in the bank to make payroll for the next pay period.

In a financial crunch like this, it is hard for businesses to project far into the future, and how they should invest now to build for it. Invoicing financing relieves businesses of short-term burdens, so they can think more and more about the long-term. invoice discounting, in short, allows importers and exporters to invest and reinvest in themselves so that their business can grow at a time when others may be stagnating or shrinking. 

Importers may want to import adjacent products to their core offering or improve their sales and distribution infrastructure. Exporters may want to break into more markets or diversify their supply chain of raw materials. These are just a few examples of how businesses may want to grow, but they are only illustrative: When a business has significantly more working capital, all made possible via invoice financing, they have unlimited options for how they can grow their business.

In the end, 2023 may be a major turning point for businesses in the supply chain, due to the extraordinary change that the New Year promises. The change can be in either direction: Some businesses will fail, and others will thrive. Businesses can put themselves in a better position to succeed by exploring invoice financing as a means of strengthening their working capital, building win-win relationships with their key supply chain partners, and reinvesting and future-proofing their business.