Whilst salaries, plant, equipment and other overheads need to be paid upfront or immediately in order to manufacture goods, the time between delivery and final payment can be very long indeed, and inevitably makes it hard for manufacturers to stay on top of cash flow.
Additional complexity of operating in a regulated environment, as well as complying with industry standards and guidelines, all eat into already tight profit margins. Add to that the tough competition from overseas, it is easy to see why the manufacturing sector is often at the forefront when the economy jumps or slumps.
There are a myriad of lenders with commercial finance products and who target manufacturers. Invoice Finance and Invoice Discounting products can release much needed cash to pay for raw materials and utilities. Asset Based Lending products can help release capital tied up in physical assets, such as inventory, plant & machinery and real property and allow you to borrow against these assets.
However, there are a myriad of options offered by lenders, so it is really important the business seeks advice from specialists who have deep experience of manufacturing, who can guide them through one of the most critical business funding decisions they will ever make.