The Polish model of business growth. Why can working capital be as important as innovation?

The Polish economy is increasingly returning to the question of how to build competitive advantages for the coming years. Not only through cheaper labour, exports or copying solutions from more developed markets, but through its own competences, technologies, companies and a larger share in creating added value.

This topic appeared, among others, in an opinion by Mikołaj Raczyński, Vice President of the Polish Development Fund, published in Business Insider. The author points out that Poland’s ambition should not be to copy Silicon Valley, but to build its own position in the future division of technology, capital and added value.

A similar direction appears in an opinion published by Money.pl, where Raczyński writes about a new key area of the Polish economy and a growth opportunity related to the next stage of transformation. This is an important discussion, but from the perspective of many companies it can be brought down to a very practical question: what needs to happen for Polish businesses to truly grow?

Because growth does not begin only with a grand strategy, technology or access to venture capital funds. For many companies, it begins much closer to everyday operations: with a larger order, a new contract, the need to purchase materials, hire people, automate a process or maintain liquidity until the customer pays.

Not every innovation looks like a startup

In public debate, innovation is often associated with an app, artificial intelligence, a VC fund or a global technology product. This is an important part of the economy, but not the only one. In many Polish companies, innovation looks far less spectacular, although it has very real significance.

It may mean automating a warehouse, buying a new machine, changing the way costs are managed, planning payments better, entering a larger supply chain or being able to handle a contract that was out of reach for the company just a year earlier.

For a manufacturing company, innovation may mean shortening the order fulfilment time. For a service company - better control of projects and costs. For a B2B supplier - the ability to accept a larger order without freezing all available cash. For a trading company - better management of inventory and seasonality.

It is not always a story about breakthrough technology. Often, it is a story about a company gradually increasing its agency: being able to operate faster, more stably, with more control and a lower risk of losing liquidity.

The Polish model of growth must include companies that already operate

Discussions about the future of the economy often focus on new technologies and large strategic projects. This is understandable, but at the same time we need to remember the companies that already create real value today: manufacturing, service, logistics, construction, trade, implementation and industrial companies.

They employ people, fulfil orders, handle contracts, cooperate with larger entities and are often close to specific market needs. Not every one of these companies will become a global startup. Many of them, however, can develop in very specific niches, scale their operations and capture a larger share of value in supply chains.

In this context, the topic of local content is also interesting, meaning a greater share of domestic companies in the delivery of projects and orders. Business Insider described calculations by PKO BP economists, according to which increasing the share of local content by 10% across the entire public sector could boost GDP by 1.2%, and across the whole economy by as much as 3.6%.

This shows that the development of Polish companies does not have to rely only on creating entirely new sectors. It can also mean domestic businesses participating more often in larger projects, delivering more advanced products or services and keeping a larger part of value within the economy.

The barrier to growth is often not the idea, but liquidity

In practice, many companies do not stop because they lack ambition. More often, they stop because the next step requires cash to be committed earlier.

A company may have a good product, a team, customers and orders, but still not have enough buffer to safely enter a larger contract. It may need funds for materials, advance payments to suppliers, wages, transport, equipment, subcontractors or inventory. Costs appear earlier, while inflows arrive only after the order is completed, a stage is finished or the payment term passes.

This is why working capital is often one of the most underestimated elements of growth. It does not sound as impressive as innovation, foreign expansion or new technologies, but without it a company may not be able to use the opportunity that has already appeared.

A larger contract does not always solve a liquidity problem. Sometimes it increases it first. The company has to invest before it starts earning. It has to maintain current payments before it receives money from the customer. It has to carry a larger operational scale before higher sales translate into a real inflow to the account. We describe a similar problem more broadly in the article on how to deliver a larger project without blocking cash.

Working capital is growth infrastructure

Working capital is often treated as an emergency topic: something a company needs when it starts running out of cash. Meanwhile, in a growing company, it can play a completely different role. It can become growth infrastructure.

Well-planned working capital allows a company to accept a larger order, buy materials earlier, pay the team on time, maintain relationships with suppliers and avoid stopping other projects just because one larger contract absorbs too much cash.

This is particularly important for B2B companies that operate with deferred payment terms. A contract may be profitable, the customer reliable and the invoice correctly issued. Even so, for several weeks or months the company finances delivery from its own funds. In such situations, the question is not only: does the company have customers? The more important question is: does the company have enough liquidity to serve the customers it has already acquired?

Growth requires not only money, but also control

Access to capital is important, but on its own it is not enough. A company that wants to grow needs to see what is happening with its money: which invoices are waiting for payment, what costs will appear in the coming weeks, which liabilities are urgent and whether planned inflows will be enough to cover expenses.

Without this visibility, growth decisions become more intuitive than managerial. The company may know that it wants to accept a larger contract, but not see whether it can afford the first stage of delivery. It may plan to buy equipment, but not see how this will affect liquidity in the following month. It may have many issued invoices, but still not know when cash will actually arrive.

That is why growth requires a combination of two things: access to financing and control over operational finances. One gives the company the ability to act, while the other helps assess when and at what scale that step is safe.

In this context, tools such as PaveNow CFO Suite can support companies in daily monitoring of invoices, costs, payments and cash flow. It is not only about order in documents, but about better visibility of whether the company is ready for the next stage of growth.

If the company still relies on spreadsheets and manual updates for a large part of financial control, it is also worth checking whether Excel is no longer enough to manage company finances.

Financing should match the rhythm of the company

Not every company needs a large investment loan. Not every company is looking for an investor. Not every company should finance growth in the same way. Much depends on what the company needs funds for, how quickly inflows will appear and what problem the financing is supposed to solve.

If the company wants to finance a specific project or larger order, contract financing may be a natural direction. If it plans to buy equipment, increase the scale of operations or enter a new stage of growth, a growth loan may be useful. In larger projects, when a higher amount is needed and the company can offer collateral, a business loan secured by real estate may also be an option.

The most important thing is to match financing to the situation. A company waiting 60 days for payment from an invoice needs a different solution than a company that needs to buy materials for a new contract. A business that wants to increase production capacity or open another location may need something different again.

If the company does not know which solution fits its situation, it can start by reviewing available forms of business financing.

Polish growth may be less spectacular, but more real

Polish companies do not need to copy Silicon Valley to build value. Their growth may look different: more operational, industry-specific, gradual and closer to the real needs of the economy.

It may mean that a manufacturing company accepts a larger order because it has capital for materials. A service company serves a larger client because it can control project costs. A B2B supplier enters a larger supply chain because it has the liquidity needed to complete the first stages of cooperation. A family business automates part of its work because it has funds for equipment and process change.

This is also innovation. It may be less media-friendly, but it is very important for the economy. Because business growth does not always begin with a breakthrough idea. Sometimes it begins with the company having enough capital, control and confidence to use the opportunity that is already in front of it.