Invoice Factoring for Manufacturing Companies
Even the most successful manufacturing companies can experience cash flow issues. The high operating costs, purchasing of raw materials, projects that take months to complete, periodic lower returns, and the numerous expenses that are required to keep manufacturing companies operational can be difficult to navigate.
Invoice financing (accounts receivable factoring) can keep your business afloat during high and low production periods. Factoring services for manufacturing companies allow you to eliminate debt, maintain payroll and continue production without waiting months for your customers to pay.
Manufacturing Factoring vs. Bank Loans
There are multiple ways small business owners and manufacturers can obtain financing, but that is not to say that all financing options are created equal. Bank loans and lines of credit are always the first thought for any business in need of extra capital. However, the eye-popping interest rates, lengthy application and approval processes, and rigid requirements can put these options out of reach for many small businesses. Even fully-established companies with great credit histories can wait months for funding. Invoice factoring is a way to get instant operating capital without creating new debt on your balance sheet or negatively impacting your credit score.

Instead of borrowing money, you sell your open accounts receivable (unpaid invoices) to a factoring company in return for a percentage of their value upfront. With manufacturing factoring, you won’t have to wait 60 to 90 days for your clients to pay, either. Instead, you can get up to 95 percent of your total invoice value in advance within as little as 24 hours of being approved, and the factoring company will typically handle the collections process for you.
Top Financial Challenges in the Manufacturing Industry
The manufacturing industry can often be affected by changes in such factors as commodity prices, labor costs, technology, tariffs, and taxes. These factors can impact the profitability of manufacturers and may also affect the ability of companies within the sector to compete effectively. Other financial challenges in the manufacturing industry include:
How to Run a Successful Manufacturing Company
Running a successful manufacturing business requires striking the right balance between the needs of your wholesale or retail buyers and those of the end consumer while still creating a profitable operation. Your long-term success will depend on your ability to establish loyal buyer relationships and the ability to operate with good profit margins. This can be done by making and delivering top-quality products in terms of everything from design to quality control. You need to identify gaps in your production efficiency and implement solutions to minimize waste and improve your work processes.
Improving the efficiency of your production process includes multiple factors, such as ensuring you hire capable staff, invest in training, properly maintain your equipment, and prioritize communication and effective coordination between team members. Network to build a strong group of contacts that can help you talk to the right people and get your foot into the right doors. Ultimately, all these factors will contribute to ensuring that you are running your business as efficiently as possible, saving money, and creating opportunities for growth.
Financing Options for Manufacturing Companies
Invoice factoring is an easy and affordable way to access the working capital you need when you need it. Factoring Companies Canada allows you to find and compare factoring services to ensure you are partnering with a company that is best suited to help you. You need a factoring company that understands the complexity of your industry. Browse our Factoring Guide to find a manufacturing factoring company near you.
Want to get started with invoice factoring for your manufacturing company? Request a factoring rate quote today.