Manufacturing Invoice Factoring & Financing
Buy raw materials and cover the production run before the finished goods invoice is paid.
Let's fund your manufacturing business.
Two questions to start. No obligation, no credit pull.
What is manufacturing invoice factoring?
Manufacturing invoice factoring converts the invoices for shipped orders into cash while the customer's payment terms are still running. You receive most of each invoice's value up front, which pays for the materials, labor, and machine time on the next run, and the balance arrives, less a fee, when the customer pays.
The cash flow challenge for manufacturers.
A purchase order doesn’t pay for the raw materials, the labor, or the machine time it takes to fill it. Financing bridges the gap between accepting an order and getting paid for the finished goods.
A production run ties up cash at every stage before it generates a single dollar of revenue: raw materials have to be bought, labor and machine time have to be paid for, and the finished goods often sit in inventory before they even ship. The bigger the order, the more that gap strains working capital, which is why winning a larger customer can squeeze a manufacturer’s cash position even as it grows the business on paper.
Because availability follows the eligible receivables you carry, it rises as your invoiced sales grow, within your approved limit, instead of depending on a bank line set a year or two ago. When a manufacturer lands a large new account, that account’s invoices can add to its availability once they are issued and eligible.
How receivables financing works for manufacturers.
- You accept a purchase order and start the run, buying materials and scheduling labor and machine time.
- You ship the finished goods and invoice the customer on the agreed terms, commonly net 30, net 45, or longer.
- We review your customer's credit and advance most of the invoice value as soon as you submit it.
- That cash goes straight back into the next run. When your customer pays, you receive the rest of the invoice, minus our fee.
Who pays you, and when.
Manufacturers usually sell to a smaller number of larger customers: distributors, retailers, OEMs, or other manufacturers further along the supply chain. Large buyers tend to pay reliably but on long terms, and they are not always willing to change them. Strong credit paired with slow cash is the profile receivables financing handles best.
It also means a single invoice can be large. One big purchase order can account for a meaningful share of a month's revenue, so the timing of that one payment can decide whether the next run starts on schedule or waits.
Common pressure points.
Raw materials and labor are cash-out well before a finished-goods invoice is cash-in.
A large new order can strain working capital more than it grows the business, at least at first.
Suppliers often want faster payment terms than customers are willing to give.
What the funding pays for.
- Raw materials and components for the next production run
- Direct labor and overtime during a rush order
- Tooling, maintenance, and repairs to keep machines running
- Deposits to suppliers who want payment before they ship
- Freight and packaging costs to get finished goods out the door
Choosing between factoring, a line of credit, and payroll funding.
Invoice factoring works well when a few large invoices drive your revenue. Each shipped order converts to cash on its own timeline, and you can choose which invoices to finance. Compare it with an A/R line of credit in our factoring vs. line of credit guide.
An A/R line of credit suits manufacturers with steady, repeat orders. Availability follows the receivables you already carry, and you draw as materials purchases come due.
Payroll funding is rarely the right fit for a manufacturer that bills on shipment. It matters mainly if you perform long production or engineering work before you are able to invoice.
What to have ready.
- A current accounts receivable aging report
- Invoices, along with the purchase orders or shipping records behind them
- A list of your customers with their payment terms
- A summary of your upcoming material and supplier commitments
- Basic business and ownership information
Manufacturing invoice factoring questions, answered.
Can financing cover raw materials before production starts?
Financing is based on invoices you have already issued. An A/R line of credit lets you draw against your existing eligible receivables, and that cash can buy materials for the next production run.
Does my customer need to be large or well-known?
It helps but isn’t required. What matters most is a track record of paying invoices on the terms they agreed to.
What if my margins are thin on a particular run?
Financing decisions focus on the invoice and the paying customer’s credit rather than your margin on a job. Your margin still matters for whether the cost of financing makes sense on that work, so check the math on thin-margin runs.
Can I finance an invoice before the goods ship?
Financing against an invoice generally starts once the invoice exists, which for most manufacturers means once the order ships. For work performed before you are able to bill, ask about payroll funding, which advances against earned but unbilled revenue.
Can seasonal manufacturers use this?
Yes. Because an A/R line of credit follows your receivables, availability rises in a busy season when invoices are large and recedes when sales slow, so you are not tied to a fixed limit set for a different part of the year.
What if a large customer pays on very long terms?
Long terms are exactly the gap financing is built for. The customer's credit matters more than the length of its terms, and a strong, established buyer on long terms is often a good candidate.
Will financing change how I deal with my customers?
Customers are typically asked to remit payment on the financed invoices to us, which is standard practice. We handle that professionally, and your day-to-day relationship stays with you.
How quickly can manufacturers get funded?
Setting up a facility can often be done in days, and once it is in place, invoices for shipped orders can be funded as fast as the same day.
Businesses with similar cash flow patterns.
Other industries we finance.
- Transportation & Trucking
- Wholesale & Distribution
- Staffing & Recruiting
- Printing & Packaging
- Business & Professional Services
- Technology & IT Services
- Security Services
- Janitorial & Facility Services
- Oilfield & Energy Services
- Healthcare & Medical Staffing
- Food & Beverage
- Import & Export
- Telecommunications
- Logistics & Freight Brokerage
- Warehousing & Fulfillment
- Marketing & Advertising
- Government Contractors
Ready to fund your business?
Tell us about your company and we'll get in contact with you to discuss next steps. There is no cost or obligation to get started.