Unlocking Sri Lanka’s Export Potential with Supply Chain Finance
Sri Lanka is at a crossroads. After years of economic turbulence, the island nation is finally seeing signs of stability and renewed growth. Exports are rising, inflation is under control, and international lenders are stepping in with new support packages. But for thousands of exporters, especially small and medium-sized enterprises (SMEs), one problem continues to hold them back: cash flow.
In global trade, waiting 60, 90, or even 120 days to be paid is the norm. For a small apparel factory in Colombo or a tea producer in Nuwara Eliya, these delays can mean halted production, missed orders, or even bankruptcy. This is where Supply Chain Finance (SCF), particularly receivables finance, can step in as a lifeline.
Sri Lanka’s Export Engine
Exports remain one of Sri Lanka’s strongest economic pillars. In 2024, the country hit a record US $16.17 billion in export earnings, a 7.1% increase from the previous year. Merchandise exports accounted for US $12.71 billion, while services such as IT, logistics, and business process outsourcing contributed another US $3.46 billion.
The main export drivers were:
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Apparel and Textiles – worth around US $5 billion, providing employment to hundreds of thousands.
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Tea – contributing US $1.44 billion, with Sri Lanka still holding its crown as the world’s premier tea exporter.
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Rubber and Coconut Products – vital contributors to both domestic industry and foreign exchange.
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ICT and BPM Services – a fast-growing export sector attracting global clients.
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Food Processing and Spices – including cinnamon, pepper, and processed fruits, all in high global demand.
Exports make up around 20% of Sri Lanka’s GDP, underscoring their importance for the nation’s growth story.
The Cash Flow Challenge
Behind the impressive export numbers lies a tougher reality for businesses. Cash flow gaps remain the biggest barrier to scaling.
Here’s why:
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Long Payment Cycles – Exporters often ship goods months before receiving payment. Buyers in Europe or the US may take 90 days or more to settle invoices.
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Rising Costs – In industries like tea and apparel, wage hikes and raw material inflation squeeze margins. For example, the recent 70% wage increase in the tea sector added nearly LKR 35 billion in extra costs.
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Banking Constraints – Traditional loans are collateral-based and slow to access. SMEs without strong balance sheets or property to pledge are often locked out of credit.
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Foreign Exchange Issues – Though stabilising, access to USD liquidity has been limited, making it harder for exporters to cover immediate expenses.
The result? Even successful exporters find themselves unable to fulfil new orders or expand capacity because they are simply waiting to get paid.
How Supply Chain Finance Can Help
This is where Supply Chain Finance becomes transformative. Unlike traditional loans, SCF leverages the strength of the buyer or the validity of the receivable itself to provide quick, short-term funding.
The Benefits for Exporters
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Immediate Cash – Exporters can unlock up to 80–90% of their invoice value as soon as goods are shipped.
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No Additional Debt – Receivables finance is off-balance-sheet, meaning companies improve liquidity without increasing leverage.
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Stability – Faster cash conversion supports steady production cycles, wage payments, and raw material purchases.
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Global Competitiveness – SMEs can confidently take on larger orders and new international buyers.
The Benefits for Buyers
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Extended Payment Terms – Buyers maintain flexibility in managing working capital.
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Stronger Supplier Relationships – Offering early-payment options helps buyers secure priority from their supply chain partners.
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ESG Alignment – SCF can be linked to sustainability targets, rewarding suppliers who meet social and environmental standards.
In short, SCF builds a healthier, more resilient supply chain ecosystem where both exporters and buyers win.
What the Future Holds
The road ahead looks promising for SCF in Sri Lanka.
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Macro Stability – GDP growth returned to 5.0% in 2024, inflation is under 1%, and reserves are being rebuilt. A more predictable macro environment encourages lenders and investors to enter.
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Export Growth – With continued demand for apparel, tea, ICT, and food products, the export sector is expected to expand steadily through 2030.
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Digital Infrastructure – Digital platforms provide the rails for smoother, financing processes.
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Anchor Buyers – Large exporters and multinationals in apparel and tea can become anchors for reverse factoring programs, extending liquidity to hundreds of SMEs.
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ESG and Sustainability – There is growing appetite for green and social SCF programs, where suppliers are incentivised through better financing terms for meeting environmental and social standards.
If executed well, supply chain finance could unlock billions in working capital, support thousands of SMEs, and accelerate Sri Lanka’s position in global trade.
The Bigger Picture
Sri Lanka has proven time and again that it can thrive in global markets. From tea to textiles to technology, its exporters are world-class. Yet, without access to timely working capital, their growth potential remains constrained.
Supply Chain Finance is not just a financial tool, it is an engine for economic revival. By bridging the gap between shipment and payment, SCF gives exporters the confidence to grow, innovate, and compete globally.
For a nation rebuilding its economy and eyeing sustainable, export-led growth, receivables finance could be the game-changer.
Partner With Us
At Convergence Capital Group, we specialise in receivables-based supply chain finance that empowers exporters to unlock working capital without taking on additional debt.
If you are an exporter in apparel, tea, food, or consumer goods, or a bank or trade partner looking to strengthen your ecosystem, we would love to explore how SCF can work for you.
Let’s start the conversation today. Connect with us here.
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