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In the manufacturing sector, especially those applying for the CHIPS Act, extending long-term payment plans is a strategic approach to remain competitive, incentivize larger orders, and foster strong client relationships. However, given the often narrow profit margins, manufacturers face significant expenses, including procuring raw materials, prepaying subcontractors and suppliers, acquiring equipment, leasing facilities, and compensating employees. These financial demands can strain cash flow, making it challenging for companies with limited liquidity to offer trade terms.
Manufacturing invoice factoring, also referred to as accounts receivable factoring, presents an effective solution by enabling manufacturers to extend attractive payment terms to clients while preserving a robust cash flow. This financing option ensures that businesses can sustain operations and drive growth without compromising their financial stability.
Manufacturing invoice factoring is a business funding strategy that allows manufacturing companies to access immediate working capital by selling their accounts receivable, unpaid invoices, to a third-party company, known as a factoring company.
In the manufacturing industry, companies frequently experience cash flow challenges due to the lag between completing a product or service and receiving customer payments. This delay is often extended due to the multiple stages involved, including production, shipping, and distribution.
Invoice factoring with manufacturing factoring companies helps address this cash flow gap by providing an immediate access to working capital.
Problems with cash flow can interrupt your business and stop business growth in its tracks. Accounts receivable factoring for manufacturing companies gives you fast access to the capital you’ve already earned via your outstanding receivables. It doesn’t matter what you manufacture, if you need access to working capital, Rivier Finance can help:
Here’s how factoring for a manufacturing company typically works:
There are many ways to fund your business. However, factoring has some key advantages over other common financing options. For example, it’s common to apply for a line of credit from a bank. To qualify for credit, you’ll need to show the bank your assets, which include cash as well as equipment. Smaller and newer businesses often have trouble getting enough credit to meet their needs.
ACH and MCA loans are another option you might consider. Automated clearing house (ACH) and merchant cash advance (MCA) loans are usually easy to qualify for. The downside is that interest rates and lender fees are very high. This can lead to a downward spiral of debt that makes it hard to run a profitable business.
Manufacturer factoring offers several advantages to manufacturing companies. Here are some of the key benefits of manufacturing factoring:
It’s important to note that while the manufacturing invoice factoring process offers numerous benefits, each company’s situation is unique. Be sure to carefully evaluate the costs, terms, and reputation of the factoring company before entering into a factoring agreement to ensure it aligns with your specific financial needs and goals.
Riviera Finance works with a variety of companies in the US and Canada to help them maintain cash flow and meet weekly financial demands.
Our process is built around immediate response to client needs, and the best cash turn around in the industry.
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Invoice financing for manufacturers works by using unpaid invoices as collateral to access immediate cash flow. You submit your outstanding invoices to a factoring company, who gives you an advance on the value of your unpaid invoice. You put your money to work immediately, while the factoring company works with your customer to settle the invoice according to the original payment terms.
What is the CHIPS Act? The CHIPS and Science Act was a bipartisan bill signed into law in August 2022. Among its objectives were to strengthen the economy, revitalize the American semiconductor industry, and boost national security. CNBC quotes government officials as saying the goal is to “lure in as much private investment as possible while boosting supply chain resilience and economic security by funding U.S.-based facilities in areas like materials and packaging.”
CHIPS Act funding is a real opportunity for smaller companies in the tech sector to grow as they contribute to national security and America’s position as a leader in the semiconductor market. As funding is expected to conclude by the end of the calendar year, applicants need to move quickly.
Riviera Finance will help with funding for those who support facilities for this industry, including transportation, construction, facility workers, AC, concrete, among others. Contact us online for a free, no obligation consultation today.
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