How Longer Payment Terms Strained a Manufacturer's Liquidity

The client is a cable manufacturer with over 30 years of operating history in Vietnam. For most of that period, the company relied on advance payments and letters of credit to manage its export transactions.

As competition in global cable supply increased, buyers began requiring open account terms as a condition of continued business. The exporter transitioned accordingly, but the shift created a significant gap between production costs and the moment of payment collection.

The company had export credit insurance in place, which provided partial protection against buyer default. However, the residual risk exposure of 10 to 20 percent remained uncovered, and the insurance did not address the working capital shortfall that came with extended payment cycles. Despite a strong order book and established buyer relationships, the exporter's cash position was under pressure.

How the Facility Works: Converting Receivables into Working Capital

Tradewind structured a non-recourse export factoring facility aligned with the client's trade flows to the United States and Australia. The facility operates as follows:

• Advance funding: Tradewind advances up to 90 percent of each invoice value shortly after shipment, converting receivables into available cash.
• Credit protection: Because the facility is non-recourse, Tradewind assumes the buyer credit risk. By leveraging this structure, the exporter benefits from 100% credit protection against buyer default or insolvency.
• Collections management: Tradewind manages the receivables administration and collection process, reducing the operational burden on the exporter's finance team.

This structure replaces the partial protection previously offered by export credit insurance with a more comprehensive solution that covers both the financing gap and the full buyer credit risk on approved receivables.

What This Means for the Exporter

With the facility in place, the exporter can offer 90-day payment terms to its buyers without absorbing the cash flow impact internally. Production cycles are no longer constrained by the timing of buyer payments, and the company has a predictable source of liquidity tied directly to its shipment activity.

The non-recourse structure also removes a layer of financial uncertainty. Rather than relying on insurance with residual exposure, the exporter now operates with full credit coverage on approved buyers through Tradewind's facility.

Why Tradewind Was Selected

Tradewind was selected for its ability to structure receivables financing solutions for cross-border trade flows involving multiple buyer markets. Key factors in the decision included:

• Over 25 years of experience in international trade finance, with particular depth in export factoring across Asia, the Americas, and Europe
• Local structuring capability through Tradewind's Shanghai office, with direct knowledge of Vietnamese export markets
• A financing structure tailored to the client's specific trade corridors and buyer payment terms
• Consistent execution and clear communication throughout the onboarding process

A Facility Built Around the Client's Trade Flows

"This facility gives the client a reliable source of working capital tied directly to its export activity," said Chris Chang, Regional Commercial Director, Far East at Tradewind Shanghai. "By structuring the solution around their specific trade flows to the United States and Australia, we were able to address both the financing gap and the credit risk exposure in a single facility."

Facing Similar Pressure from Extended Buyer Payment Terms?

Tradewind structures receivables financing solutions for exporters managing cash flow across international trade corridors. Whether you are dealing with longer payment cycles, buyer credit risk, or the operational complexity of cross-border collections, we can help you find the right structure for your situation.

Contact us at www.tradewindfinance.com to discuss how a tailored trade finance solution can support your export business.

About Tradewind Finance

Founded in 2000, Tradewind Finance is a global trade finance company specialising in cross-border receivables financing, export factoring, supply chain finance, and credit protection. Tradewind maintains a network of offices across Bangladesh, Bulgaria, China, Hong Kong SAR, Hungary, India, Pakistan, Turkey, the United Arab Emirates, and the United States, alongside its headquarters in Germany. By combining financing, credit protection, and collections into a single integrated solution, Tradewind helps exporters and importers manage working capital, reduce risk, and grow their international trade with confidence.