Invoice Factoring for Manufacturing Companies

Get access to revolving funds when you need it most

Ezra Cabrera

August 12, 2021

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Manufacturing Industry

Manufacturing Industry Overview

The manufacturing industry is a leading sector in the United States. According to the Bureau of Labor Statistics the manufacturing industry employs more than 12.75 million people, which makes up close to 9% of the US workforce. The leading manufacturing industries range from consumer goods and electronics to petroleum, automotive, and food processing. With such a large economic footprint there is a constant need for working capital to meet the demand of the manufacturing companies. Manufacturers rely on US based and international suppliers to provide raw materials and parts for production.

Whether large or small, manufacturing companies require working capital to support ongoing cashflow needs. Many expenses are incurred when purchase orders are received and while product is being manufactured, all before being able to invoice customers. Manufacturers need capital for payroll, materials, inventory, and day to day operating expenses. In addition, after goods are shipped manufacturers typically are waiting 30-90 days to get paid from customers. In some cases, invoice terms might be as long as 120 days. This results in a large cashflow gap and is the reason why many companies utilize factoring for manufacturing companies. Our manufacturing factoring specialists at SMB Compass are here to walk you through the benefits of using our specialty factoring programs.

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Factoring for Manufacturing

Factoring for Manufacturing Companies

Invoice factoring is a common form of financing in not only manufacturing, but many B2B industries. Manufacturing companies are accustomed to long periods of cash outlay before being paid from customers. When you combine the production lead time and invoice terms many manufacturing companies are waiting over 120 days before being paid from customers. To bridge that gap many businesses turn to invoice factoring for manufacturing companies. Factoring enables manufacturing companies to get paid within 24 hours of invoicing customers. When you eliminate customer payment terms the result is working capital at your fingertips. The additional working capital allows for manufacturers to take on more work, receive supplier discounts, and focus on growing their companies.

Benefits of Factoring for Manufacturers

Benefits of Factoring

Eliminate Amortizing Debt

A major benefit of invoice factoring that there are no monthly payments when you sell an invoice. Unlike traditional financing where you make interest and principle payments, with invoice factoring the factoring company is paid when invoices are paid. By eliminating amortizing debt, you will no longer have large monthly payments due to a lender.

Take Advantage of Supplier Discounts

Manufacturing factoring accelerates payments on open invoices which results in more cash in your business. Many suppliers offer discounts for early payments on materials and with more available capital manufacturing companies have the ability to take advantage of supplier discounts to increase profit margins.

Improve Working Capital

Invoice factoring turns invoices into cash that can be used in many areas of your business. By working with a manufacturer factoring company you will have more cash on hand to use for operational expenses.

No Monthly Volume Requirements

Our manufacturer factoring programs provide ongoing flexibility with no volume commitments. This means that you can pick and choose which clients you want to factor, which invoices you want to factor, and the frequency at which you want to utilize your factoring line of credit.

Free Customer Credit Checks

Knowing who you work with is a crucial part of making sure that you are going to be paid for the work you do. When using factoring for manufacturing companies you can rely on us to run free credit checks on new and existing customers to make sure they are financial suited to pay your invoices.

No Long Term Contracts

We believe strongly in always working hard to earn relationships. Constantly delivering, providing excellent customer service, and keeping our clients happy is how we maintain long term relationships. This is what enables us to provide either no committed contracts or short-term contracts for our clients.
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Right Manufacturing Factoring

Choosing the Right Manufacturing Factoring Company

You should spend time researching every potential business relationship before entering into an agreement. This is the same when choosing a manufacturing factoring company to work with. Make sure that you work with a factoring company that has a deep understanding of your industry and takes the time to learn about your company. Our manufacturing specialists at SMB Compass will always make it a point to provide as much information and transparency as possible. Speak with a factoring advisor today to learn more about how SMB Compass can provide the working capital solution you are looking for.

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Call Us: 888-853-8922
info@smbcompass.com