Manufacturing and Engineering
Do you own a manufacturing or engineering company? Is waiting for your invoices to be paid slowing your work down? Here’s how invoice finance could be the answer…
Contents
- How can invoice finance help manufacturing and engineering companies?
- How does it work?
- A real-world example
- What to do next
Benefits of Invoice Finance for Manufacturing and Engineering Companies
It is the same scenario you see time and time again – you have provided goods or services, sent out your invoice and then you may need to wait 30, 60 or even 90+ days to receive those funds. Your growth is halted; if you had received the funds immediately, you could be paying more suppliers and taking on more work.
This is where an invoice finance facility could help. Instead of waiting for and chasing your debtors to pay, you could receive up to 85% of your invoice value that same day. So, how does it work?
Step-by-step guide to invoice finance
- Send your invoices
Firstly, you send your invoice to your customer, and another copy to your chosen lender.
- Receive up to 85% of the invoice value
Depending on the terms agreed, you will receive up to 85% of the upfront invoice value on the same day as when you issued the invoice.
- Your customer pays their invoice
Your customer pays their invoice within the agreed terms of 30, 60 or 90 days.
- You receive the remaining 15%
Once your customer has paid their invoice, you will receive the remaining 15% of the invoice minus the lender’s fee.
A made-up example: Tables and Chairs Ltd
Tables and Chairs Ltd have manufactured 50 sets of tables and chairs, delivered them to their customer and send them an invoice of £10,000. They expect the invoice to be paid after 30 days from the end of the month. In the meantime, Tables and Chairs Ltd receive a phone call requesting 100 sets of tables and chairs, to be delivered in 21 days. They don’t have the cash flow to be able to pay for supplies to produce the new sets of tables and chairs, as they have not yet been paid for the first 50.
Fortunately, Tables and Chairs Ltd have an Invoice Finance facility. They send a copy of the invoice to their lender and receive £8,500 that same day. They can purchase the materials they need for manufacturing the new sets of tables and chairs. After 30 days, the lender receives the invoice payment and sends Tables and Chairs Ltd the remaining £1,500 minus their fee.
Having the Invoice Finance facility has meant that Tables and Chairs Ltd have been able to grow their business incredibly fast compared to if they were having to wait to receive funds from their debtor.
How do I get an Invoice Finance facility?
This is where Contact Business Finance comes in! We have a wealth of knowledge in the world of Invoice Finance and can put you in touch with the most suitable lender. In a free-of-charge service, we will compare the market for you to find what would be best for you and your business.
And it’s not just Invoice Finance we can help with – we can look at business loans, asset finance, trading finance and more.
