Invoice Factoring Guide for Trucking Companies

Whether your manufacturing company produces packaging, apparel, food and beverages, chemicals, or another product, the cost of selling your goods includes everything from paying your employees to purchasing supplies and transportation.

But if you’re seeing the prices of materials and fuel going up, are left waiting for customers to pay their invoices, or have had a big order come in, meeting the financial obligations of running and growing your business can become challenging.

If delays and added costs are creating interruptions for your business, invoice factoring may be the ideal solution to your cash flow needs. This solution can get you the working capital you need to continue the production cycle.

In this guide on invoice factoring for manufacturing companies, you’ll learn:

Challenges facing manufacturing companies

Why should manufacturing companies use invoice factoring?

What can a manufacturing company expect with invoice factoring?

How can a manufacturing company qualify for invoice factoring?

Invoice factoring: ensuring a smooth cash flow cycle for manufacturing companies

Challenges facing manufacturing companies

One of the biggest expenses for manufacturers are the raw materials and inventory that you have to buy upfront. And without supplies, you can’t produce products for your customers. When you encounter increases in the cost of supplies or supply chain issues, this can cause serious strains on your cash flow — leaving you unable to service your current customers or get new ones.

Solution:

“Our process represented a genuine breakthrough in design and production that would save lives in combat. Tow bars typically take 24 weeks to make; we’ve got it down to roughly 16 to 18 weeks to build a multi-piece tow bar whose individual sections can be lifted by one person. We needed to get this product in the hands of the military, but the small business loan we were trying to acquire fell through. That’s when our loan broker introduced us to Liquid Capital.”

Ken Fincher
President, Defense Product Services Group USA Inc.

In addition to the cost of supplies increasing, you may also have some customers paying their invoices at net 30, 45 or even 60 days. Longer payment terms (whether you can control them or not) create a difficult cycle that may hinder your ability to take on more work or deliver on more contracts.

manufacturing companies cash flow challenges

invoice factoring for manufacturing companies

Why should manufacturing companies use invoice factoring?

Invoice factoring will help you accelerate your cash cycle, quickly replacing your near-current assets — or invoices — with cash. Liquid Capital purchases your invoices, providing funding and allowing business owners to outsource invoice management by collecting the money owed to you by your customers.

This will allow your company to avoid costly interruptions to your manufacturing cycle, by providing you with the working capital to replenish the inventory or components you need to make further sales — and take advantage of additional opportunities to grow your business.

By advancing the cash to cover the cost of goods sold and your expenses — including payroll — the invoice factoring process will enable you to reload early and generate more business.

Solution/strategy:

Having extra working capital available may also help you qualify for discounts from your suppliers by allowing you to purchase supplies in bulk. You may be able to take advantage of early payment discounts by settling your outstanding accounts payables ahead of their due date.

When these kinds of discounts are taken into account, you may find they are equal to or greater than the cost of factoring.

Unlike traditional financing options, the invoice factoring process doesn’t require the same types of documentation, nor does it require a minimum time that your company has been in business. This is great for new and growing businesses, as well as established companies that need an alternative funding solution.

Invoice factoring may also allow you to maintain the control you want in your business — since you may no longer need to search for investment dollars as you grow, including bringing on additional shareholders or selling equity in your company.

What can a manufacturing company expect with invoice factoring?

Invoice factoring is incredibly easy for business owners in the manufacturing sector to learn, understand and implement. Here’s how invoice factoring works:

After approval, we will advance your business up to 85% of the value of your invoices.

We will collect payment from your customers and we’ll pay you the remainder of the balance (less applicable fees)

You’ll be able to view invoices in our real-time 24-hour online reporting system, where you’ll have full access to funding status.

The process can be customized to match your needs, for example, Liquid Capital can time financing to match your payroll so you always have enough money to pay your staff.

Invoice factoring is a flexible solution for manufacturers, as you are also able to decide how long you need to use invoice factoring services. Liquid Capital won’t lock you into a long-term contract. If you have months where you have adequate cash flow and don’t need to factor your invoices, you are able to opt out of the process.

how works invoice factoring for manufacturing companies

how can a manufacturing company qualify for invoice factoring

How can a manufacturing company qualify for invoice factoring?

For companies in the manufacturing sector, the invoice factoring approval process starts by contacting your closest Liquid Capital office (no credit checks or registrations are required or executed at this point). This is followed by a more detailed application where Liquid Capital’s underwriters review the financial health and creditworthiness of your customers — including credit reports, references and opportunity analysis.

We’ll also ensure that your invoices are full and final for services rendered or delivery of a product, that they set out clear terms and conditions, contain all relevant information for payment and that you’ve received verbal or written confirmation of approval.

If your manufacturing business and accounts receivable clients are in good standing, we’ll approve you for factoring and perform ongoing credit monitoring.

Invoice factoring: ensuring a smooth cash flow cycle for manufacturing companies

In this environment, manufacturing companies are seeing pressures on both sides of their balance sheets – input costs are rising, while invoice payments from customers are taking longer. With invoice factoring, your business can access the working capital it needs to replenish inventory as needed, avoiding interruptions to your manufacturing cycle and allowing you to take advantage of new opportunities.

“You didn’t start in this business to struggle forever. Let us help you by showing you a light at the end of the tunnel — and the best way to do that is to accelerate your cash cycle by replacing your near-current assets with cash. Because when you’ve got cash, you can do anything.”

Liquid Capital Principal

There’s a reason we’re North America’s leading invoice factoring provider.

Need more information about invoice factoring?

We’re ready to help you meet any immediate cash flow needs. Get in touch with us to book a free consultation call, and discover if factoring is the right fit. Or visit our Invoice Factoring FAQ page to read the answers to our most frequently questions.