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Factoring Improves Manufacturer Cash FlowAs a supply chain finance tool, invoice factoring lets you unlock working capital from unpaid accounts receivables without waiting for your customers to pay.

Improving Cash Flow: Financing for Manufacturers

Manufacturer Financing Scenario: Factoring Invoices Helps to Grow a Manufacturing Business

One of the common cash flow challenges U.S. manufacturers face is not having enough money to fulfill large orders because working capital is tied up in accounts receivable invoices. This manufacturer financing scenario shows how one manufacturer was able to improve cash flow by financing receivables with DB Squared.
manufacturer receivables financing

Manufacturer Financing Improves Cash Flow – Fast!

Invoice factoring, also called receivables financing or A/R factoring, solves cash flow challenges.

Manufacturers factoring invoices with DB Squared can access the money owed them by their customers, without waiting for those customers to pay.

What is invoice factoring
An illustration of how accounts receivable factoring can help your manufacturing business.
How Factoring Solves the Problem of Cash Flow Financing:

A new manufacturer of outdoor furniture is approached by a large big box retailer. The retailer submits a large purchase order of outdoor furniture. In fact, it’s the largest purchase order the manufacturer has ever been asked to fill. What an opportunity!

The manufacturer agrees to produce the outdoor furniture requested by the retailer and does so for the price of $30,000. The manufacturer then submits a billing invoice for that amount to the retailer. The billing cycles for most large companies like the large retailer in this example, are 30 to 45 days.

While the manufacturer is waiting for payment from the large retailer, several other orders come in. The manufacturer needs immediate cash flow to fill the new orders.

The manufacturer chooses to factor – or sell – the invoice to invoice factoring company DB Squared.
 
 
manufacturer invoice factoring

We buy the invoice and the manufacturing company gets a check just one day after accepting our manufacturer financing proposal. We fund 98% of the face value of the invoice and hold the rest in reserve until their customer pays the invoice.

Working capital in hand, the manufacturer is able to purchase the inventory, pay operating and payroll costs and fulfill the other new orders that came in.

Once the retailer pays us for the full amount of the invoice 45 days later, we also forward the remaining balance of the invoice to the manufacturer (called the reserve) less our manufacturer invoice factoring fee. (Our factoring fees usually range from 1-6%.)
Access to Working Capital is Just One Benefit of Factoring Invoices
Improving cash flow financing accounts receivable invoices is just one of the benefits of this form of manufacturer financing.

Organizations that factor their customer invoices with a non-recourse factoring company like DB Squared also reduce their financial risks, because non-recourse factors assume the credit risk for the invoices they purchase.

In this way, factoring also helps to reduce or eliminate bad debt for a manufacturer that finances receivables with a non-recourse factor.

Find out more about Recourse vs. nonrecourse financing
 
 
manufacturer financing supply chain

Why Factor Receivable Invoices with DB Squared?

  • Factoring rates from 1-6%
  • Advances on factored invoices up to 98% - or more
  • No long term factoring contracts
  • Prompt, professional customer service
  • Approved to factor invoices with us? Get same and next day funding for factored invoices!
  • No application fees
  • No credit check or due diligence fees
  • No funding or notification fees
  • No hidden fees to surprise you
  • No monthly minimums
  • Retain control of invoicing your customers or let us do the work for you – the choice is yours!
Use our online factoring opportunity cost calculator to see how much working capital is tied up in your accounts receivable invoices – money you could use to grow your manufacturing business.
 
 manufacturer cash flow financing
small business factoring companies

Improve Cash Flow: Financing Receivables with DB Squared

Factoring Invoices a Great Option for Fast-Growing and Seasonal Businesses
“Often, open invoices are one of the largest tangible assets on a company's balance sheet. Rather than waiting 30 days or longer to be paid, it makes sense to sell the invoices. 

This type of financing won't show up as additional debt on a company's balance sheet, so companies maintain their flexibility for obtaining other types of long-term financing.

Factoring can be a great option for fast growing and seasonal companies."

—Tom Glazier, VP Operations, DB Squared
 
 supply chain cash flow financing

Factoring Quick Quote

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