Manufacturing Finance Scenario with Invoice Factoring

When waiting for customers to pay means waiting to take on new business, invoice factoring for manufacturers can speed up cash flow, giving you the working capital you need to grow.

Manufacturing Invoice Factoring Scenario

Factoring with us enabled a manufacturer to take advantage of a big growth opportunity.

Our client, a new manufacturer of outdoor furniture was approached by a big box retailer. The retailer submitted a sizable purchase order of outdoor furniture. In fact, it was the largest purchase order the manufacturer had ever been asked to fill. It was a great opportunity for this young company to grow quickly.

The manufacturer agreed to produce the outdoor furniture requested by the retailer at the price of $300,000. The manufacturer then submitted a billing invoice for that amount to the retailer, who, like other large retailers, typically had a 30-45 day billing cycle.

While the manufacturer was waiting for payment from the large retailer, several other orders came in. The manufacturer needed immediate cash flow to fill the new orders, so they decided to factor the invoice with us.

We factored the invoice for a small fee, called a factoring fee*. We sent the manufacturer an immediate advance** and held the rest in reserve until the retailer paid the invoice.

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

*Factoring fees as low as 1%
**Advances up to 98%

Factoring is a Manufacturing Finance Tool that Speeds Up Cash Flow

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. Invoice factoring, also called receivables financing or A/R factoring, solves this type of cash flow challenge.

Manufacturers factoring invoices with DB Squared can access the money owed them by their customers, without waiting for those customers to pay. Improving cash flow financing accounts receivable invoices is just one of the benefits of this form of manufacturer financing; some of the other benefits include:

  • Reducing the time and resources a manufacturer needs to spend on invoicing and collection activities
  • Leveraging faster cash flow to negotiate vendor and supplier discounts
  • Ability to take on new business more quickly or fulfill bigger orders
  • Ability to give their customers longer payment terms than competitors

In addition, manufacturers who factor with a non-recourse factoring company like DB Squared also reduce their financial risks, because non-recourse factoring companies assume the credit risk for the invoices they purchase.

Manufacturer Finance: Factoring with DB Squared

Cash flow – not revenues or profits – is often the most important factor when it comes to growing a business. Without adequate cash flow, a manufacturer’s ability to take on new business or commit to fulfilling big orders will be limited.

Factoring speeds up cash flow, enabling manufacturers to take advantage of growth opportunities as they arise.  When you factor with us, you can expect:

  • Factoring fees from 1-5%
  • Advances up to 98% and free same-day funding
  • No long term factoring contracts
  • No hidden fees to surprise you
  • No application fees or due diligence fees
  • Free credit checks on your customers
  • No monthly minimums – factor when you choose
  • Retain control of invoicing your customers or assign the work to us– the choice is yours!

— All with prompt, professional customer service from a dedicated account manager who understands the unique needs of your business.

Use our manufacturer factoring calculator to see how much working capital is tied up in your accounts receivable invoices – money you could use to grow your manufacturing business more quickly.

Manufacturer Factoring Calculator

Opportunity Cost Calculator

Use our invoice factoring calculator to determine whether factoring receivables could expedite cash flow in your business.

  • Your Current Total Accounts Receivable
    $1,000 $5,000,000+
  • Your Average Customer Invoice Amount
    $0 $250,000+
  • Advance Rate for Factored Invoices (Advances usually range from 85-98%)
    85% 98%
  • Factoring Fee (Factoring fee usually ranges from 1-5%)
    1% 5%

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  • Expedite working capital tied up in customer invoices, without waiting for customers to pay Working Capital Unlocked $0
  • Average Factoring Fee $0

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Factoring Can Be Ideal
for Fast-Growing Manufacturers

“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 factor the invoices.

Plus, since this type of financing won’t show up as additional debt on a company’s balance sheet, 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