The Rising Cost of Trade Uncertainty Demands a New Working Capital Strategy

By Ashutosh Taparia, CEO – Fintech Business, CredAble

The cost of uncertainty is becoming a larger working capital requirement. Tariffs raise procurement costs, disrupted shipping corridors lengthen delivery times, and geopolitical tensions force businesses to reconsider suppliers and markets. Each response commits more liquidity between procurement and customer payment. Maintaining the same volume of trade can consume more working capital, leaving less capacity to invest and grow.

For banks and corporate leaders across the UK, Europe and the US, financing must keep pace with these changing operating requirements. PwC’ recent working capital study 25/26 found that net working capital days rose 48% in the UK and 9.5% in the EU between 2015 and 2024.

India offers a recent illustration where banks have reported a 15–20% rise in demand for working capital funding, linking the increase to higher input costs and longer shipping timelines amid the West Asia conflict.

The implications extend beyond immediate shock. According to Standard Chartered’s 2026 trade insights, 65% of surveyed corporates expect supply chain reconfiguration to increase trade costs by at least 10% over the next three to five years.

A company holding more stock, supporting critical suppliers and extending customer credit needs a coordinated approach across the working capital cycle.

An interoperable toolkit for the trade cycle

Open account solutions form an integrated toolkit, aligning funding across procurement, inventory and collection. Their value depends on how effectively they work together.

A manufacturer may extend supplier terms to finance additional inventory. Yet weakening those suppliers could jeopardise replenishment, while slower customer payments place further pressure on liquidity. A better payables metric can conceal deteriorating performance elsewhere.

An integrated strategy should preserve the business’s ability to trade. Payables, inventory and receivables programmes must reflect common liquidity forecasts, funding availability and counterparty exposures. Technology makes that coordination practical when operational and financing systems can exchange reliable information.

Intelligent Payables that support supplier continuity

Supplier finance allows eligible vendors to receive early payment against approved invoices while the buyer pays on the agreed date. Dynamic discounting offers an alternative when the buyer has surplus liquidity to deploy in return for an early-payment discount. The appropriate choice depends on forecast liquidity and supplier needs, but both rely on efficient onboarding, timely invoice approval and reliable transaction data.

An approved facility offers little protection if critical suppliers cannot complete onboarding before their next production commitment. AI-assisted digital onboarding and document intelligence can guide suppliers through requirements, classify documents and pre-fill profiles. Configurable identity and business-verification checks accommodate different entities and jurisdictions, with uncertain results routed for review. Reducing repeated submissions and manual intervention can also make smaller suppliers more economical to onboard.

Once suppliers are onboarded, AI can help identify the most appropriate financing approach, highlighting how financial information and payment behaviour can support supplier segmentation, indicating where financing or dynamic discounting may offer greater value.

Ongoing analysis can also help identify emerging supplier stress and inform funding decisions as conditions change.

These capabilities strengthen programme performance across several dimensions:

• Risk intelligence: More timely assessment of supplier health and transaction anomalies.
• Capital allocation: Better alignment of funding with supplier requirements and buyer liquidity.
• Operational efficiency: Less manual work across document review and financial analysis.
• Decision-making: Faster assessment supported by current data and predictive insights.
• Supplier access: Broader assessment of businesses with limited conventional credit histories.

Translating these insights into funding requires confidence in the underlying invoices. Document intelligence can compare line-item quantities and prices across purchase orders, invoices and delivery records, flagging deviations from agreed tolerances.

This supports timely invoice approval and gives banks & institutions a clearer transaction view, while operations teams focus on exceptions.

ERP connectivity completes the workflow by linking approved invoices to financing and returning disbursement and settlement updates to enterprise systems. Treasury can then select externally funded early payment or dynamic discounting within the supplier’s operating timetable. Programme success should consequently be measured through active participation and time to first funding, alongside financing volumes: supplier continuity depends on how reliably available finance becomes accessible cash.

Treasury connects the choices

Treasury brings supplier commitments, stock holdings and expected collections into a common funding plan. Procurement savings may require earlier payment; longer customer terms may support expansion while increasing financing costs. Those trade-offs belong in commercial decisions before commitments are made.

Scenario analysis should test how delayed shipments, additional inventory or slower collections affect liquidity and facility headroom. Treasury can then coordinate internal funds, bank programmes and structured trade solutions while managing currency and counterparty exposures.

Predictive analytics can support this judgement by incorporating payment behaviour and operational signals into liquidity forecasts. A shipping delay should prompt a review of both the expected collection date and the funding needed to bridge the longer cycle. Treasury then has a basis for adjusting financing before pressure reaches suppliers or customers.

Receivables that support liquidity and growth

Receivables purchase can release liquidity against eligible invoices, while distributor finance supports channel partners holding and selling goods. Both should help fund growth within clear customer-exposure limits.

The quality of the underlying trade asset matters. Source-level invoice validation can compare submitted information with independent records, including electronic invoicing, tax or goods-movement data where available. Such evidence does not alone establish that an invoice is undisputed, unpaid or unfinanced elsewhere.

AI-led receivables reconciliation closes another gap. Buyers may settle several invoices together, pay in instalments or deduct disputed amounts. Where receipts enter a seller’s operating account without clear references, paid invoices can remain open, distorting overdue reporting and consuming financing limits.

AI-assisted matching can combine payer identity, references, amounts and payment history to suggest allocations and flag short payments. Confirmed allocations can trigger invoice closure and limit release under programme rules; uncertain matches require review.

This makes reconciliation part of credit management. Increasing deductions can reveal dilution, while genuine collection delays require different treatment from unmatched receipts. Banks gain a clearer view of asset quality, and sellers can regain access to funding sooner after settlement.

Inventory resilience requires control as well as funding

Trade shifts, geopolitics and shipping disruptions are pushing procurement from just-in-time to just-in-case. Businesses are holding more inventory and positioning stock closer to demand.

European corporates today have €1.3 trillion in untapped working capital opportunity of which €411 billion is locked in inventory. Inventory finance today sits alongside payables and receivables solutions to fund these buffers, keeping liquidity moving as supply chains adapt.

Citi’s recent research found that 72% of surveyed large corporates prioritised releasing trapped liquidity, up from 66% at the start of 2026.

The shift from just-in-time towards just-in-case changes the financing question. Businesses need to decide which buffers protect fulfilment, how long to hold them and who should carry the associated exposure.

PwC’s study found that inventory days in Western sectors with above-average net working capital days were 13.6% higher in 2024 than in 2015. Financing these holdings requires more than extending payment terms.

Flash-title structures involve an intermediary purchasing goods and immediately reselling them on extended terms. Third-party ownership can instead support the holding period, with a specialist retaining inventory until required.

These structures sit at the intersection of credit risk, inventory management, operational control and reconciliation. Legal entity arrangements, enforceable ownership and real-time stock visibility are integral to the financing proposition. Banks can partner with inventory specialists to combine funding with oversight of storage, stock movements and release.

Accounting treatment must reflect contractual substance. An obligation to repurchase unchanged inventory can prevent its removal from the corporate balance sheet. Under IFRS 15’s repurchase provisions, certain arrangements retain the asset and recognise a financing liability. Requirements depend on the applicable accounting framework.

The commercial test remains whether stock has a credible route to consumption or sale. Financing an obsolete buffer merely postpones the loss.

Technology makes integration practical

Connected technology gives the toolkit an operational foundation. Enterprise, treasury and financing systems need a consistent view of orders, stock, invoices and payments. Bidirectional ERP connectivity carries approved invoices into financing workflows and returns disbursement and settlement updates, keeping records aligned as trade progresses.

AI strengthens this foundation when extraction, validation and monitoring work together. Accurately reading an invoice is only the starting point. Configurable checks must establish whether it agrees with the underlying trade records, with independent confidence signals and reason-coded results supporting an auditable decision trail.

Behavioural models can then help identify unusual invoice patterns, deteriorating payment performance and emerging supplier stress. Their value depends on reliable data and a defined response: which transactions can proceed, which need investigation and who can authorise an exception. Bank teams retain accountability for credit decisions.

For CredAble, an integrated working capital strategy connects financial capacity with commercial activity. The strategic measure is how quickly reliable evidence produces an informed funding response. Connecting payables, treasury, receivables and inventory through interoperable technology helps businesses protect supply, support customers and preserve the capacity to grow through uncertainty.