Dark Horse Financial

Using Finance to Improve Cash Flow in a Manufacturing Business

Covering the costs of raw materials, shipping, labour and production costs is a reality that puts strain on a business and can limit growth if not managed effectively.

With cash flow pressure, it’s important manufacturing businesses have good process in place. In addition to this there’s also a place for equipment finance, trade finance and debtor finance.

Equipment finance can be used to preserve cash and spread the cost of acquiring an asset over a term while you recognise the return that asset provides. Also, if you have unencumbered assets, you can cash out the equity held in this machinery and use the capital generated to manage cash flow or to fund growth opportunities.

Trade finance is there to pay suppliers and typically provides up to 90 day terms (some lenders will go to 120 days and above). This enables you to take advantage of discounts from suppliers, make bulk orders, and can allow you to grow as your work flow and opportunities expand.

Debtor finance can be used to payout a trade finance facility once an invoice is raised for a customer’s order. With a term matched to payment terms it further supports your business cash flow position and supports growth.

Leave a Comment

Your email address will not be published. Required fields are marked *