Can you finance a manufacturing firm with invoice factoring?

Almost every business struggles with cash flow problems from time to time because their customers are slow to pay their invoices. When you are struggling to get your clients to pay their invoices, you will not have money to pay your invoices and you won't be able to take on more orders as you don't have the money to pay for the raw goods. A great option you do have is called manufacturing invoice financing

Manufacturing plants cannot wait 90 days or longer for their customers to pay. You need to use invoice factoring to acquire the money from your invoices sooner. When you send your invoices to a factoring firm, they will essentially take over the invoice. Once you generate the invoice, they will offer you a payment amount of 80% of the total invoice amount. After they work with your customers to collect the rest of the funds you will be paid whatever is left on the invoice minus the fees for the factoring firm.

Discrepancy between cash flow income and expense can leave you with a number of problems. You may have lenders that call in your loan because you have missed a payment. You may also deal with vendors that will not ship you products to produce as you have not been able to make your payments. With your outflow cash, you need to negotiate with these companies to try and come up with a solution that will fit both of your needs. Try to negotiate to have longer payment terms like 60 days versus 30. By negotiating longer payment terms you will be able to focus on gathering the money from your customers in a timely manner so you can turn around and give it right back to your vendors and suppliers.

Delaying your cash flow payments may be the only option you have to keep your cash flow from going into the red. It's a great way to finance your business when you are in need of funding to purchase raw goods and other supplies for the company.

Not every manufacturing plant can acquire loans through traditional lenders. The age of your company along with the inherit risks it poses to the lender will play a large role in your ability to acquire funding.

The great thing about manufacturing invoice factoring is that you aren't taking out a loan. You are simply acquiring money that is already owed to you. By working with the factoring form you will be able to acquire the money now instead of in a few weeks, which may happen if you try to acquire a loan to fix your cash flow needs.

There is another option you have which is based on your monthly credit card sales. If you are getting a high volume of credit card sales each month, you can easily acquire financing from your credit cards. You can usually borrow about 50% or more from the credit card sales and use this money to put back into your cash flow and other things for the manufacturing plant. This is a great option like the invoice factoring as you aren't actually borrowing money from a lender. Instead you are borrowing money from future sale and the payments will be automatically deducted from your credit card sales.

Seek out the help of multiple companies when you are trying to find a solution to your manufacturing plant problems. You need to build a stronger cash flow in order to take on the larger orders and the only way to do this is by speeding up the payments from your customers.