Manufacturers are a vital driver of this nation’s economy. Following the COVID-19 shutdowns, many manufacturing companies were hit in unexpected and unprecedented ways. Supply, demand, and skilled labor availability were all impacted at the same time. Many companies in this industry face unique challenges ahead that will make day to day operations and business growth hard, costly, as well as frustrating.
Issues with rising costs & sourcing of raw materials, supply chain, labor costs, regulations, slow-paying customers, efficiency improvements, competition, transportation, equipment costs and demand usually end up being finance related. Too often when seeking financing opportunities, manufacturers may be denied a loan based on irregular sales, lack of a track record, or a lack of assets that aren’t already pledged to another lender. The inability to obtain financing may hamper the purchase of goods from your supplier and therein prevent you from delivering your finished product on time to your customer. Also, you may experience missed business opportunities. When working capital is lacking, you may be forced to walk away from a large purchase order or contract opportunity that you may not get a second chance at.
If this sounds like your business, it is important to know that many manufacturers have turned to Capstone for invoice factoring and purchase order financing to address their immediate and long-term cash flow needs that are required to grow or support their operations.
Purchase order financing (or PO financing) allows manufacturing companies to take advantage of growth opportunities. Manufacturers can gain the ability to bid on high profile (and high margin) projects which will increase industry presence and provide customers with the confidence that their orders will be fulfilled in a timely manner.
Capstone works closely with contract manufacturers to secure funding based on outstanding purchase orders. Rather than focusing on your company’s balance sheet, we base our funding decisions on the strength of your customer and their creditworthiness. We take into consideration the length of time they have been operating, their net worth, financial statements, and how current they are on paying their vendors.
Nearly immediate access to cash – We can typically provide financing within 48 hours of approval.
A customized approach – We work closely with you to understand your needs and we can create a funding program that best meets your needs. Every business is different and a one size fits all approach to financing may limit your growth. We will work with you to determine where you are falling short within your cash flow and provide a solution to that specific issue.
Acceleration of your growth – Take on larger contracts and projects. When you don’t need to worry about having cash on hand to fund your suppliers, you will be able to spend your time getting larger orders or pursuing new customers. This can help you grow your business more rapidly and offer more flexible terms to your own customers.
Increased inventory or expanded production – There will be instances when purchase orders are received for items that are not in stock. You either have to purchase the product from your supplier, manufacture the product or subcontract a portion of the work to another manufacturer. Never have to turn down orders because you lack the capital needed to cover business costs.
Greater flexibility with supply chain management – Many businesses and entire industries have been forced to rethink their supply chain management strategy due to the recent crisis. Shortages of critical items and supplies exposed many vulnerabilities in supply chains. We can provide you with sufficient access to capital to help you navigate these issues.
Growth of your labor force and addition of employees – Business growth requires labor, however, the increased costs inherent in a seasonal labor force changes do not have to be burdensome. Retain the skilled labor you need to maintain your production schedule.
Easier access to add new equipment – The need for new equipment doesn’t have to slow you down. Obtain the equipment you need to keep up with demand and stay competitive.
Some manufacturing companies always have the raw materials on hand to fulfill a contract. However, once the finished goods have been delivered, they may have to wait up to 90 days for the customer to pay for the goods. When you work with Capstone, you can submit your invoice to us after the finished goods are delivered to your customer, and receive an advance against the invoice. No more waiting for customers to pay. This is a bonus because it allows you to move onto the next job or project in advance of waiting on the payment terms offered to your customer. Whether you decide to factor a single invoice, or prefer to factor multiple invoices, we can help find the right solution for your business.
With purchase order financing and accounts receivable factoring you can continue to grow your business, hire new employees, and take advantage of vendor discounts. Having cash on hand, or on demand, ensures your business can continue to grow and thrive in these challenging times and not be concerned about the cash flow you need to meet your everyday obligations. Further, these financial tools are just as scalable as your business. You will not need to go back to the bank for a larger line of credit to take on new orders. As long as you can procure the contract, you know you’ll be able to fulfill it with purchase order financing and accounts receivable factoring.
If you are a manufacturing company or a contract manufacturer scrambling to make sense out of these challenging times, let a Capstone Corporate Funding representative explore the various financing options available with you. We help our clients look beyond the fog of uncertainty to help businesses thrive and experience long-term growth.
Capstone is committed to helping manufacturers and contract manufacturers in various industries. For more information regarding our financing options, please call us at (212) 755-3636 to speak with a representative today. We will work with you to develop a customized financing program that will allow you to accept larger contracts, purchase raw materials needed to fill existing contracts, or meet your immediate cash flow needs.
