Short answer
Growing export sales usually needs more working capital than growing at home: you pay for stock, staff and shipping before overseas customers pay you, often on longer terms. The working capital you need is roughly the cash tied up between paying suppliers and being paid by customers, multiplied by your sales growth. Exporters fund it from profits, overdrafts, working capital loans, trade finance or invoice finance.
Key facts
- Exports often mean longer payment terms and longer shipping times
- Working capital need grows with sales
- Working capital loans are flexible; trade finance is tied to orders
- Government-backed options exist through UKEF
Why exporting ties up cash
- Longer payment terms from overseas buyers
- Longer shipping and customs times
- Upfront costs: market entry, certification, travel, local staff
- Currency risk between invoice and payment
Working out how much you need
Working capital days = stock days + customer payment days − supplier payment days. Multiply your average daily cost of sales by those days to estimate the cash tied up, then add one-off costs of entering new markets.
Illustrative example. An exporter with £3m of overseas sales a year and 120 working capital days has around £1m tied up. Growing overseas sales by 30% needs about £300,000 more working capital, before market-entry costs.
Finance options
| Option | Best for |
|---|---|
| Working capital loan | General growth: stock, staff, new markets |
| Overdraft | Short swings in cash |
| Trade finance | Specific large orders |
| Invoice finance | Slow-paying customers |
| Equity | High-risk expansion with no near-term payback |
Related: Export Finance →
Related questions
Is working capital finance short-term?
Usually 12 months to a few years, depending on the product.
Should I use an overdraft or a loan?
An overdraft suits short swings; a term loan suits a sustained increase in working capital from growth.