Finance for manufacturers: it depends which stage of the cycle is actually tight
A manufacturer's cash gets tied up in three places before a sale even happens, raw materials, work-in-progress on the shop floor, and finished stock waiting for a buyer, plus a fourth, separate question: machinery and tooling capex. Picking the right finance product starts with working out which of the four is actually the constraint, not defaulting to whichever product a business has used before.
Four different pulls on cash, four different routes
Where this goes wrong
A manufacturer with strong, fast-paying customers can still hit a cash squeeze that invoice finance doesn't touch, because the actual bottleneck is materials and WIP sitting in front of the receivable, not the receivable itself. And blending a machinery purchase into a working-capital request usually produces a facility priced and structured for neither job properly.
FAQs
What's the difference between funding stock and funding a receivable?
Stock and WIP finance funds cash tied up before a sale exists, raw materials bought, part-built product on the shop floor. Invoice finance funds cash owed after a sale exists, a genuine, accepted invoice to a customer. They sit on opposite sides of the same cycle and usually come from different products, sometimes different lenders.
Should machinery be funded the same way as day-to-day stock?
No. Machinery and tooling are capital assets, usually suited to asset finance secured against the equipment itself. Stock and WIP are working capital, cycling faster and usually funded against the trading pattern rather than a specific asset. Blending the two into one request tends to produce a facility that's the wrong shape for either.
We already use invoice finance, why would we need anything else?
Invoice finance only reaches once a receivable exists. If cash is genuinely tied up earlier, in raw materials or WIP, that gap sits upstream of anything invoice finance can touch, and a working-capital facility sized to the production cycle is the more direct fix.
Which finance product fits which stage?
It depends where the actual constraint sits: pre-sale cash tied up in materials or WIP points toward a working-capital facility; a genuine post-sale receivable points toward invoice finance (see MarketInvoice for whole-of-market comparison); a capital purchase points toward asset finance. Most manufacturers need more than one of these at different points, not a single product for everything. FundBiz doesn't route or match enquiries.
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