Another way to increase liquidity in the short term is to finance your purchasing volume. Similar to factoring, financial service providers take over your trade payables, pay your suppliers according to the agreed payment terms and grant you longer payment terms of up to 120 days. This allows you to support your company’s liquidity in the short term.
It is even possible for the financial service provider to pay your suppliers immediately and take a cash discount. The cash discount profit already bears part of the financing costs.
However, keep in mind that working capital financing always supports your liquidity only once. Your business must earn and repatriate the money in the medium term.