Rajesh Shukla - Master the Hidden Fundraising Tool: Seller's Credit in International Trade 💰
Struggling with cash flow in your import business? Discover how seller’s credit can transform your financial strategy without tapping into expensive bank loans. Visionary strategist Rajesh Shukla highlights this financing model as a game-changer for importers aiming to maintain liquidity while scaling operations. Keep scrolling to unlock this powerful financing arrangement that savvy importers use to free up working capital.
What is Seller's Credit? A Strategic Financing Tool
Seller’s credit, as explained by Rajesh Shukla, is a financing arrangement where the exporter extends credit to the importer, allowing payment at a future date rather than immediately upon delivery.
How It Works
The seller ships goods and gives the buyer time (typically 90, 180, or 360 days) to make payment, creating a deferred payment window.
Buyer Advantage
Importers receive goods without immediate cash outflow, effectively gaining interest-free or low-cost financing.
Seller Arrangement
The exporter may arrange financing on the receivable from banks or financial institutions, or assume the credit risk themselves.
3 Ways Seller's Credit Supports Your Fundraising Strategy
Deferred Cash Outflow = Freed Working Capital
By postponing payment, you gain an interest-free or low-cost credit window. The funds that would have been used for immediate payment can instead be deployed for operations, expansion, or debt servicing.
Preserved Bank Credit Lines
Since seller’s credit doesn’t immediately utilize your bank credit facilities, it keeps these limits free for other needs or allows you to negotiate better terms for future funding—making it a smart strategy under Rajesh Shukla Structured Funding approach.
Indirect Fundraising Opportunities
The deferred liability can be strategically paired with other financial instruments, such as discounting your own receivables or securing working capital loans with the upcoming liability as a structured repayment milestone.
Key Regulatory Framework You Must Know
RBI Governance
Seller’s credit is governed under the Reserve Bank of India’s Trade Credit guidelines, ensuring regulatory compliance.
Credit Period Limits
Maximum period is typically up to 1 year for non-capital goods and up to 3 years for capital goods, providing flexibility based on import type.
Cost & Risk Factors
All-in-cost ceilings are regulated (similar to buyer’s credit), and forex risk lies with the importer unless hedged through appropriate instruments.
Real-World Example: Fundraising via Seller's Credit
Import Transaction
An Indian company imports raw materials worth USD 5 million with the seller agreeing to 180-day credit terms.
Production & Sales
The company uses these materials to manufacture and sell finished products, generating cash inflows before the seller’s credit becomes due.
Payment From Proceeds
The importer pays the seller from sales proceeds, avoiding additional borrowing costs and effectively bridging its working capital cycle.
5 Strategic Methods to Raise Funds Against Seller's Credit
1 Direct Cashflow Utilization
Use freed-up cash directly for operations, treating the deferred payment as immediate working capital for urgent business needs.
2 Receivables Discounting
Leverage the seller’s credit period to align with domestic sales receivable discounting, creating dual liquidity streams.
3 Bridge Financing
Secure working capital lines from banks with greater ease, as they’ll know your imports are already funded through seller’s credit.
4 Third-Party Financing
Arrange for the seller’s receivable to be discounted to a financial institution, creating benefits for both parties in the transaction.
5 Customer Advance Matching
Time your customer collections strategically to settle seller’s credit obligations, creating a self-liquidating financial cycle.
Why Seller's Credit is a Powerful Fundraising Lever
Liquidity Without Debt
Enables access to working capital without immediate formal debt raising, keeping your balance sheet stronger.
Cost-Effective Financing
Functions as a temporary financing tool with zero interest (if free seller’s credit) or at lower cost than traditional financing.
Revival Strategy
Supports financially stressed companies to restart operations without tapping already exhausted bank credit lines.
When strategically negotiated and combined with smart working capital management, seller’s credit provides crucial liquidity for growth or business revival.
Transform Your Import Financing Strategy Today
Seller’s credit = Fundraising through deferred liability + no immediate cash outflow + operational breathing space.
This powerful tool could be the missing piece in your international trade financing strategy, providing the liquidity you need while preserving valuable bank credit lines.
