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Invoice Factoring for Manufacturing
Any manufacturing company will tell you that one of the biggest barriers they face is getting customers to pay their invoices in a speedy fashion. Manufacturing can tie up large amounts of capital, and if customers haven’t paid yet, your company might not have the cash on hand it needs to grow. Banks are hesitant to loan to manufacturing firms, and other funding mechanisms take almost as long as waiting for the clients to pay. The result is that your manufacturing company can’t grow as fast as it might. However, many manufacturing firms have found that the answer to these problems lies in invoice factoring.
What is Invoice Factoring for Manufacturing?
Invoice factoring is a business service that involves selling your receivable invoices to a factoring firm. The factoring company will pay out an initial funding rate, usually 80-95% of the value of the invoice. You’ll get the rest, minus the firm’s discount rate, once the invoice gets paid. Many factoring companies provide funding within 24 hours, making them one of the fastest options for getting the cash you need to grow your business.
Benefits of Invoice Factoring for Manufacturing
Manufacturing is a capital intensive business, and so it’s no surprise that many manufacturing companies find themselves wishing they had more cash on hand to get the things they need to grow their business. Because invoice factoring provides liquid capital quickly, you can use the cash to buy new equipment, hire more labor, secure warehousing space, or invest in R&D. The result is that you can grow and expand your business without having to worry about when your clients are going to pay.
The next benefit that invoice factoring offers manufacturing firms is that, with invoice factoring, the creditworthiness of your clients is evaluated, rather than the credit of your business. This makes it perfect for companies that are too young to get a loan, or that may have had credit issues in the past. Moreover, factoring companies often share the credit reports on your customers they generate, which means you can get a better idea about what projects you should take on for which clients.
Finally, invoice factoring centralizes many of the administrative and account processes that take up so much of a manufacturer’s time. This means you can focus on your core business process, confident that you’ve got the cash on hand to do what you need to do.
If your manufacturing business is growing but needs more cash on hand, consider invoice factoring. It might just be the solution you’ve been looking for.