If your small or medium sized enterprise (SME) works in the manufacturing industry or another sector subject to long payment cycles, this can often put pressure on a business’s cash flow.
Invoice Finance for manufacturers is one way of ensuring access to the working capital needed to meet upfront business costs even with customers who take 30, 60 or even 90 days to settle invoices.
Ready to see how much working capital you could free up? Speak with a ScotPac specialist today about Invoice Finance today.
What is Invoice Finance?
Invoice Finance unlocks the cash tied up in unpaid invoices. By providing advance access to the payments owed to your business, you can ensure you meet production lead times, fund ongoing operations and invest in time-sensitive market opportunities.
How does Invoice Finance work?
- Your business manufactures the products ordered and delivers the goods to your customer.
- You then issue the invoice or invoices as per normal with your regular payment terms.
- You submit your invoice or invoices for financing.
- ScotPac provides up to 85% of the total value of the submitted invoices as an upfront lump sum.
- Once your customers settle their invoices, you receive the rest of the value of the invoices less any applicable fees.
What are the benefits of Invoice Finance?
- Smooth out gaps in cash flow
- Ensure no disruption to operations or production
- Pay your suppliers early for discount pricing
- Access bulk rates through placing large orders
- Take advantage of larger contracts and market growth opportunities
- Fund expenditure, overheads, and payroll
- No need for business or personal assets to be used as security
How does Invoice Finance for Manufacturers work?
Long production lead times are a near-universal feature of the manufacturing industry. Along with the need to outlay large amounts of cash for upfront cost and a typical protracted payment term, manufacturers can find themselves in need of access to additional working capital.
What are the benefits of choosing Invoice Finance as your finance solution.
- Invoice Finance is a flexible business finance solution that can be tailored for specific needs
- It uses the outstanding invoices as collateral so there is no need for assets such as property to be used as security.
- It provides advance access to working capital to meet the costs of raw materials and labour
- Access to cash can be provided within as little as 24 hours from invoice submission
- It provides complete control so you can use it as needed e.g., during periods of peak seasonal demand or for large orders
- It is scalable so as your business grows you can continually access the working capital needed to fuel your SME’s success
What types of Invoice Finance can help Manufacturers?
With ScotPac, Australia’s largest non-bank finance provider with $26.3 billion invoices funded annually, our lending specialists can tailor your finance solution to suit your business needs and objectives.
In general, there are three types of Invoice Finance that can help manufacturers:
- Invoice Factoring
- Invoice Discounting
- Selective Invoice Finance
Invoice Factoring
With Invoice Factoring your unpaid invoices are basically sold to your finance provider. This means that the finance provider takes control and responsibility of collecting the outstanding payments from your customers.
While it is suitable for smaller manufacturers without the accounts receivable or debt collection capabilities of larger companies, it does mean that maintaining confidentiality of your use of the Invoice Finance facility is more difficult to ensure.
Invoice Discounting
With Invoice Discounting, you remain in control and with the responsibility of collecting the unpaid payments from customers.
While SMEs and manufacturers will require debt collection capabilities, it does allow for a greater amount of control as well as confidentiality.
Selective Invoice Finance
Selective Invoice Finance, as opposed to what is something referred to as full debtor book finance, allows you to fund only the invoices you choose rather than your full debtor book.
If you are a manufacturer that tends to deal with one-off and large orders, Selective Finance can be better aligned with your needs.
Do you want to explore Invoice Finance for manufacturers?
Whether your customers demand long payment cycles, you experience extensive production lead time or you want to take advantage of opportunities to expand in the market, make sure to speak to the team with 35 years of experience providing SMEs with custom Invoice Finance solutions: ScotPac.
If you’re a manufacturer, reach out to our lending specialists today.