Manufacturing Invoice Finance

• Manufacturing Invoice Finance solutions for businesses with annual turnover from £50,000 to £10 million
• Cash advance within 24 hours
• Merchant cash advance options for businesses that use card machines
• Business finance options include invoice finance, asset-based lending and asset finance
• Our solutions come with dedicated client manager support

Our solutions are designed to bridge the gap between carrying out work and receiving payment, ensuring your manufacturing business has the working capital to pay staff, purchase materials, hire equipment, and cover other operational costs without delays.

Call us on 0203 900 4322 to discuss tailored manufacturing invoice finance for your company.

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What is Manufacturing Invoice Finance?

Manufacturing invoice finance, also known as factoring or invoice discounting, is a specialised form of financing that allows manufacturers to unlock the cash tied up in their outstanding invoices or applications for payment.

By using these unpaid invoices as collateral, manufacturing businesses can access upfront working capital to cover expenses like raw materials, labor, and equipment – bridging the gap between completing work and receiving payment from customers.

How Does Manufacturing Invoice Finance Work?

The process of manufacturing invoice finance is relatively straightforward:

• We negotiate the best terms and rates on your behalf and present you with a range of options.
• Your manufacturing business raises invoices or submits applications for payment upon completing work or delivering goods.
• Instead of waiting for customers to make payments, you submit these unpaid invoices to an invoice finance provider.
• Within 24-48 hours, the provider advances you a significant percentage (typically 70-95%) of the total invoice value as upfront cash.
• You use this cash injection to pay suppliers, cover operational costs, and ensure production runs smoothly.
• Once your customer pays the original invoice, the finance provider releases the remaining balance to you, minus their fees(usually 1-3% of the invoice value).

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Key Benefits of Manufacturing Invoice Finance

• Improved Cash Flow - The primary advantage of manufacturing invoice finance is improved cash flow. By gaining immediate access to cash tied up in unpaid invoices, manufacturers can pay suppliers, cover payroll, and meet other financial obligations on time without disruptions.
• Quick Access to Funds - Leading invoice finance providers can advance funds within 24-48 hours of receiving invoices or applications for payment, ensuring manufacturers have the liquidity they need to seize opportunities or address unexpected expenses without delays.
• No Debt Incurred - Unlike traditional loans, invoice finance does not create debt on the balance sheet. It involves selling outstanding invoices to a finance provider at a discount, rather than borrowing money. This makes it an attractive option for manufacturers who want to avoid taking on additional debt or those who may not qualify for bank loans.
• Flexible Financing - Invoice finance is a flexible financing solution that grows in line with a manufacturer's sales volume. As the business generates more invoices, the available funding can increase accordingly, making it an adaptable solution for changing financial needs.
• Outsourced Accounts Receivable Management -  With some invoice finance arrangements, like factoring, the finance provider takes over the responsibility of collecting payments from customers. This relieves manufacturers of administrative tasks related to accounts receivable management, allowing them to focus on core operations.

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Common Payment Terms in the Manufacturing Industry

Manufacturing businesses often face similar cash flow issues due to slow-paying customers and lengthy payment terms. Just like in construction, manufacturers have to incur upfront costs for raw materials, labor, and overhead expenses to produce goods, but then have to wait extended periods (60-90 days or more) to receive payment after delivering finished products and invoicing customers.

This mismatch between paying suppliers/employees upfront and getting paid much later by customers creates a working capital crunch that can severely strain a manufacturer's cash flow and ability to take on new orders or grow operations.

Manufacturing invoice finance bridges this cash flow gap by providing immediate cash advances, typically 80-95% of the value of outstanding invoices. This infusion of funds allows manufacturers to cover operational costs, pay vendors, meet payroll, and maintain healthy cash flow without waiting months for customer payments to arrive.The financing grows in line with sales volume, making it a flexible solution that can scale with a manufacturer's needs. Additionally, some invoice finance arrangements include outsourced accounts receivable management, relieving manufacturers of collection efforts.

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Invoice Finance Options: Factoring vs. Discounting

Manufacturers can choose between two main types of invoice finance:

Invoice Factoring

With invoice factoring, you sell your outstanding invoices to the finance provider at a discount. They take over credit control and collections from your customers. This option is admin-light but means your customers deal directly with the funder.

Invoice Discounting

Discounting allows you to retain control of customer relationships and collections. The finance facility is confidential, with customers continuing to pay your business directly. This option requires more admin but can help maintain good customer relationships.

At reputable finance brokers like Clifton Private Finance, they work with specialised manufacturing invoice finance providers and traditional funders to find the ideal solution for your business requirements.

Read more: The advantages and disadvantages of invoice discounting

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Overcoming Industry Challenges with Invoice Finance

The manufacturing industry faces several unique challenges that can impact cash flow, making invoice finance a valuable solution:

• Upfront Material and Production Costs - Manufacturers often have to purchase raw materials, pay for labor, and cover significant upfront costs before even starting production. Invoice finance provides the working capital needed to fund these initial expenses without straining cash reserves.

• Long Production Cycles - Many manufacturing processes involve extended production cycles, from sourcing materials to assembling and delivering finished goods. During this time, cash is tied up, and invoices remain unpaid. Invoice finance unlocks that capital, allowing operations to continue smoothly.

• Managing Growth and Large Orders - When manufacturers secure major new orders or experience rapid growth, they may struggle to finance the necessary increase in production capacity, materials, and staffing. Invoice finance scales flexibly to provide the funding required to fulfill those large orders and seize growth opportunities.

• Global Supply Chains and Export Challenges - For manufacturers involved in international trade and global supply chains, cash flow can become even more complex due to longer payment cycles, export documentation requirements, and currency differences. Invoice finance solutions tailored to exporters can help navigate these challenges.

FAQs: Manufacturing Invoice Finance

What are the costs involved in Manufacturing Invoice Finance?

Finance fees typically range from 1-3% of the total invoice value funded. Reputable brokers negotiate to secure you the most competitive rates and transparent pricing.

Is bad debt protection included?

Many providers offer bad debt protection as part of their manufacturing finance facilities at no extra cost, safeguarding you against customer insolvencies.

How quickly can I access funds?

Leading manufacturing finance companies can advance cash within 24-48 hours of receiving your invoices or applications for payment.

Can I use it for various types of invoices?

Yes, manufacturing invoice finance covers both certified and uncertified applications for payment, as well as standard invoices for completed works or delivered goods.

Do I need to change who I invoice?

With invoice discounting, there's no need to change your invoicing process. Your customers continue paying your business directly, maintaining good working relationships.

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Unlock Your Manufacturing Firm's Potential

At reputable finance brokers, they are committed to finding the ideal manufacturing invoice finance solution to address your business's unique requirements and cash flow challenges. Their exceptional teams provide:

Our exceptional team provides:

• Market-leading rates
• Fast service – finance within 5-7 days
• Access to specialised manufacturing finance providers
• Professional guidance and support

Don't let cash flow gaps hold your manufacturing business back. Explore the benefits of invoice finance and take the first step toward unlocking your firm's full potential. Contact a reputable finance broker today to discuss tailored solutions that can fuel your growth and success.

Call us today on 0203 900 4322 or request a consultation to discuss how manufacturing invoice finance can benefit your firm.

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