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Cash Flow Injection for Manufacturing Companies

Posted by Aaron Zahedani on Fri, Oct 11, 2013 @ 06:46 AM

Increasing Efficiencies to Generate Financing
for Manufacturing Companies

Are you steadily growing, but constantly creeping close to using all your available lines of credit? Do you often go back to your private sources of finance to help in a cash crisis?

Imagine this scenario:

Cash Flow Solutions

A product manufacturer has one successful production facility, supplying several regional warehouse/distribution centers. The company is set in a profitable geographic region. Business is steadily growing and it’s time to make some changes to optimize profits. You know you are ready to grow, but your manufacturing financing comes from private equity, or traditional bank loans.

  • How will you obtain more cash to invest in the company?

  • Do you have all of the documentation prepared for the next phase of growth?

  • What will happen if your investors do not like what you present? 

  • Do they even have the funds to extend your line of credit?

Have you done the basics to maximize cash flow? Such as:

  • Keeping inventory to a minimum

  • Collecting on old accounts receivables

  • Cutting down on unnecessary spending

If you are requiring a cash injection, the following will also need to be considered, and could well be required information to provide to your investors:

  • Are your systems, such as processes, operations and inventory controls current, or are they outdated?

  • Do you have a centralized customer service process?

  • Are you managing your working capital to keep pace with expansion?

  • Are you following your business plan?

  • How is your company culture, are all your employees adhering to the company philosophy?

So what can you do to optimize cash flow and present your company in the best light?

  • Pinpoint the slow moving inventory in each location

  • Clear inventory that simply is not moving

  • Cut down on the number of special orders that disrupt the normal manufacturing flow

  • Consider new products to meet new and existing market needs

  • Make sure you have a consistent return policy

  • Automate your order entry system and manufacturing control system

  • Optimize productivity, such as process and make it consistent

Manufacturing financing takes many forms. Accounts receivable financing is a fast and cost efficient method to finance a manufacturing business when working capital is tight. It may be necessary to inject larger amount into your company through private investors or bank loans, but cash in hand from factoring your invoices can allow you to pay your bills, keep your company running, or invest in new technology or processes to optimize your success. 

Factor your accounts receivable and get immediate access to your working capital. If you have not considered factoring, take a look at the factoring facts to help you decide if this is a good option for your business.

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Topics: Manufacturing and Distribution Financing, Cash Flow, About Invoice Factoring

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