DRAFT
One of the biggest challenges of running a manufacturing company is managing its cash flow. On one hand, customers pay their invoices on 30 to 60 days. On the other hand, you have to pay operational expenses and suppliers relatively quickly. Unless your company is well capitalized, you run the risk of running into cash flow problems. To complicate matters, these problems tend to worsen when you get larger orders and when your company is growing.
The problem is simple – your company needs to pay expenses quickly and can’t afford to wait up to 60 days to get paid by clients. The solution is to use invoice financing.
What is invoice financing?
Invoice financing accelerates the revenues due to your company from customers. This provides you with the necessary funds to meet business expenses and focus on larger orders. With invoice financing, your customer does not have to pay sooner. Rather, a financial intermediary advances funds to your company using your invoices as collateral. The transaction settles once invoices are paid by your customer.
How does invoice financing work for manufacturing companies?
Generally, invoice financing integrates easily into most companies.It works as follows:
- After completing your work, you invoice your client
- You send the financing company a copy of the invoice for funding
- Your company gets an immediate 80% advance on the invoice
- Once your client pays for the invoice, you get a second advance of 20%, less the financing fee
Get an invoice financing quote
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Advantages of invoice financing
One of the biggest advantages of invoice financing is that it provides manufacturing companies with predictable cash flow. Your company gets immediate access to funds without having to wait up to 60 days to get paid by customers. Another advantage of invoice financing is that the funding line is directly tied to your sales and can grow with your business, provided that your sales are to credit worthy commercial clients. This makes it an ideal business financing solution for manufacturing companies.
Does your manufacturing company qualify?
Qualifying for invoice financing is easier than qualifying for other types of funding. The general requirements are:
- The company must be in operation. We are happy to work with start-ups as well
- You must have commercial or government clients that have good commercial credit
- You must use the working capital to pay suppliers, employees or company expenses