Manufacturing Factoring Companies
Manufacturing has shown a strong resurgence in the United States over the last decade. Everything from the automotive industry to the food processing industry has seen a substantial increase in domestic manufacturing. Increasing by almost 40% and accounting for 12% of the GDP, it’s no wonder businesses are turning to manufacturing factoring. It’s a reliable way to maintain production and support cash flow while the business grows.
Many manufacturers face the crunch from payment terms stretching from 30, 60, and even 90 days. Although terms may get pushed out the same may not be said for your expenses. Manufacturing factoring can assist with those ongoing payments for materials, utilities, and labor. By taking care of those needs, a manufacturer is able to maintain their edge against the competition by keeping the facilities running.
How Does Manufacturing Factoring Work?
The process of factoring for manufacturers is very similar to that of other industries. Unlike a loan, a manufacturer will sell an outstanding invoice to a third party factoring company. The factoring company will advance an agreed upon amount, typically 80%-90%, of the invoice value to the client. Then the factor will rate to receive payment on the invoice from the client’s customer. Once that happens, the factoring company will release the remaining balance less their fee.
Terms and fees for manufacturing factoring are similar to that of most general factoring arrangements. They will typically advance between 75% – 85% of the invoice value. A factoring company can make payments direct to your supplier to accelerate the process and keep your orders going in some situations. In addition, a manufacturing factoring company can typically work with you on an as needed basis. If you want to factor one invoice or all of your invoices they can take care of your needs.
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Benefits of Invoice Factoring For Manufacturers
Factoring is a readily available solution to your cash flow crunch. Whether you’re waiting 30, 60, or even 90 days to get paid there is a manufacturing factoring company for you. Check out some of these other benefits from the factoring companies we work with: