Monthly Archives: February 2019

How Manufacturers Balance Cash Flow and Materials

Manufacturers of all types are facing increased demands from their clients. Whether it is ductwork for HVAC installations, specialized electronics, widgets, or finished products for general consumer use, production expenses are on the rise. Manufacturers need a robust cash flow to purchase raw materials, acquire or maintain equipment, and hire employees to ensure operations run smoothly. When clients are settling accounts at intervals of 30 days or longer, this can disrupt the normal workflow for manufacturers. Fortunately, there is a simple solution.

Filling Customer Orders

Many manufacturers receive orders at a faster rate than they are paid by their customers. On the surface, this is not bad. Making a lot of sales or taking on long-term clients is very good, and can potentially position a manufacturing company for growth very quickly. The issue arises with the rate at which revenue comes into the company. The standard business practice is to issue invoices with to customers with staggered schedules ranging from 30 to 90 days. If revenue is trickling in every month or so, that can place a strain on finances, resulting in the inability to purchase materials or worse – not making payroll. In many cases, manufacturers will turn to short-term loans, but even that is not a wise solution for a recurring issue. Taking on debt and impacting business credit ratings can land manufacturers in a much tighter financial situation, especially if there are other cash flow issues.

A Debt-Free Solution for Manufacturers

Manufacturers need to achieve greater parity between orders placed and payments on invoices. To do this, manufacturers use accounts receivable factoring. Accounts receivable factoring allows manufacturers to submit unpaid invoices, or even parts of invoices, and have them converted to cash within 24 hours. This eliminates the long waiting period created by staggered payment schedules. Additionally, manufacturers can improve cash flow, reduce the need for debt-based financing, and accumulate the capital necessary to take on large and unexpected orders. Materials, equipment, payroll, and more can easily be covered without experiencing a strain on finances.

At New Century Financial, we specialize in accounts receivable factoring for manufacturers of all types. Contact our offices today to get started.

Covering Overhead Costs to Take on Larger Clients

For new and small businesses, covering overhead costs while trying to grow operations can be a challenge. Payroll, utilities, advertising, fuel for vehicle, materials and supplies – all of these things can place a strain on finances, especially when business owners are trying to court larger client accounts and act on growth opportunities.

Understanding Costs and Growth

Every business has overhead costs. Sometimes those costs are only limited to paying employees and purchasing supplies to fill customer requests as needed. When businesses are trying to position themselves for growth, the costs can increase for marketing campaigns, spots at trade shows and expositions, and rolling out new products and services. These costs can eat into revenue and stretch finances to the limit.

The Importance of a Healthy Cash Flow

In order for businesses to grow, a healthy cash flow is needed to not only cover costs, but to accumulate capital reserves as well. Many businesses do not receive immediate payment with each sale or customer order. Most adhere to staggered payment schedules of 30 days or more, depending on the type of business. The waiting period can place an even greater strain on finances, and force businesses to put off growth projects and deviate from their projected plans. Maintaining a healthy cash flow allows businesses to grow without having to resort to debt-based loans, which further impact revenue.

A Solution for Overhead and Growth 

Accounts receivable factoring allows businesses to convert invoices to cash without waiting on long payment schedules. By using accounts receivable factoring, businesses can cover overhead expenses, while also positioning themselves for growth without the burden of debt. Factoring services are fast, efficient, and reduce financial strains for businesses. Payroll, supplies, marketing, travel, and more can easily be covered without having to wait a month or longer to receive payments. Factoring services are the key to a healthy cash flow and rapid business growth.

New Century Financial specializes in accounts receivable factoring for businesses throughout the United States. Contact our offices today to put your business on the fast track for growth and long-term success.