WHAT'S IN THIS GUIDE
Manufacturing has always been a major source of GDP in the U.S. and Canada. In the U.S., GDP from manufacturing increased to nearly 2270 billion in the first quarter of 2021 from 2234 billion in the fourth quarter of 2020.¹ Manufacturing GDP in Canada increased to almost 188 CAD million in June, up from 185 CAD million in May of 2021.²
However, cash flow can become an issue for many manufacturers as they buy equipment, materials, and supplies, make payroll, fund the cost of production—before being paid for a product—and grow their businesses. The very nature of manufacturing creates cash flow issues.
Manufacturing invoice and accounts receivable factoring can provide the much-needed capital you need to grow your business.
However, even the most successful firms can experience periodic falling returns, feel the crush of high operating costs and projects that take months, sometimes years, to complete, leading to delays in cash flow and working capital. This can hinder growth and makes taking on new contracts difficult. Engineer invoice factoring can help.
Small business owners and manufacturers have multiple funding options, but a bank loan or line of credit aren’t the only ones. In fact, if you’re a small and growing manufacturer, it can be quite challenging to qualify for a loan. Even established businesses with a long and favorable credit history might wait months for funding.
It doesn’t matter if you manufacture electronics, plastics, furniture, coffee cups, pet food, can openers, or any other product. Problems with cash flow can interrupt your business and stop growth. Accounts receivable factoring for manufacturing companies gives you fast access to the capital you’ve already earned via your outstanding invoices.
Here’s how it works: a factoring company like FundThrough advances you the full amount of your invoice, less a fee, way ahead of typical 30, 60, or 90 day payment terms. Your customer pays FundThrough according to the original payment terms. This accelerates your cash flow without creating debt or giving away equity.
Invoice factoring and accounts receivable financing has many benefits. Just a few include:
In the past, factoring was largely misunderstood. Business bank loans and lines of credit were the traditional and accepted forms of financing, along with credit cards. Each of these different funding options have pros and cons to consider.
Costs for a new or growing business can be significant. You may need to purchase equipment and inventory, pay employees, and keep up with rent, taxes, and marketing. You may consider taking out a business loan.
A line of credit (LOC) is a lot like a credit card. You can borrow/withdraw money up to a certain maximum amount determined by your financial institution. You can cover day-to-day expenses and pay back your debt, only to borrow again when needed.
Like all forms of funding, business credit cards must be used wisely or things can go sideways very quickly.
Invoice factoring is not a loan. The application process is quick, there is no repayment obligation, no high interest rates, and no debt to record on your wholesale company’s balance sheet. Plus, many more companies will qualify.
Choosing a factoring partner is a lot like choosing any lender. It pays to do your homework. There are also several questions to ask prior to starting the application process:
Most factoring companies work with most industries, but not all. Some factors specialize in only a few industries.
FundThrough works with manufacturers.
Advance rates can range from 60% to 100%, depending on the factoring company and sometimes the industry.
FundThrough— 100% of the invoice amount, less a fee.
A factoring company should be able to provide what factoring fees it charges upfront. But some companies may make it difficult to determine the total costs of using their service. FundThrough offers transparent pricing so you know prior to signing an agreement.
FundThrough pricing – 100% advance rates minus a flat fee. One up front price.
A minimum is the amount you must factor every period (month, each quarter or every year). Some factoring companies offer plans that require minimums, while others do not.
FundThrough doesn’t require minimums. Only fund when you need to.
Cash flow is the number one problem for most start-ups and small businesses, especially if they’re growing. This is also true for wholesale companies. Invoice factoring companies typically consider several situations before offering you an advance.
Factoring invoices is a sound financial strategy if you—
FundThrough takes the legwork out of accounts receivables financing. It’s fully automated platform is easy to navigate, it’s fee structure is transparent and a customer service rep is there when you have questions. Find out what FundThrough’s clients have to say, and start factoring your invoices today.
Interested in possibly embedding FundThrough in your platform? Let’s connect!