Engineering & Manufacturing Funding
Engineering and Manufacturing Invoice Finance
Engineering and manufacturing invoice finance helps UK businesses release working capital from eligible unpaid customer invoices. Go-Factor helps manufacturers and engineering companies understand, compare and secure the right funding solution for materials, labour, production commitments and continued growth.
Manufacturers often pay for raw materials, specialist components, energy, labour and subcontractors before finished goods are delivered and customers pay. Consequently, cash can remain committed throughout a lengthy production and payment cycle.
Once work is complete, accepted and invoiced, eligible receivables may support an invoice finance facility. Therefore, the business can access working capital earlier instead of waiting 30, 60 or 90 days for the customer’s normal payment date.
What Is Engineering and Manufacturing Invoice Finance?
Engineering and manufacturing invoice finance is a form of working-capital funding linked to eligible business-to-business sales invoices. Subject to approval and verification, the provider releases an agreed percentage of an invoice after the goods or services have been supplied and the invoice has been raised.
When the customer pays, the remaining balance is released after the provider’s agreed fees, charges and any applicable adjustments.
Why Do Engineering and Manufacturing Businesses Experience Cash Flow Pressure?
Production costs frequently arise long before the resulting customer invoice is paid. For example, a manufacturer may purchase materials, allocate labour and use factory capacity several weeks before completing an order.
Moreover, winning a substantial contract may increase the requirement for materials, labour and production capacity. Although the order is commercially valuable, it can create immediate pressure on available cash.
- Long production and manufacturing lead times
- Raw materials and specialist components purchased in advance
- Customers operating on 30, 60 or 90-day payment terms
- Staged deliveries, milestones and complex billing arrangements
- Payroll, subcontractor and specialist labour costs
- Energy, transport, storage and factory overheads
- Customer concentration with one major buyer or contract
- Seasonal demand and fluctuating order volumes
- Investment in machinery, tooling and production capacity
- Growth occurring faster than available working capital
How Manufacturing Invoice Finance Works
- The business completes an order. Goods or engineering services are supplied in accordance with the customer contract.
- Delivery or completion is evidenced. The business retains purchase orders, delivery notes, certificates or other documentation required by the customer and funder.
- An invoice is raised. The invoice must represent a genuine completed sale and meet the provider’s eligibility requirements.
- Funding becomes available. Subject to verification and the facility terms, an agreed percentage of the eligible invoice is released.
- The business reinvests the working capital. The released cash can help meet materials, payroll, subcontractor and production commitments.
- The customer pays. The remaining balance is released after the agreed fees, charges, reserves and any applicable adjustments.
What Can Manufacturing Invoice Finance Help Support?
Raw Materials
Reinvest cash released from completed sales into materials and components required for future orders.
Payroll and Skilled Labour
Improve working-capital availability for employees, subcontractors and specialist technical labour.
New Contracts
Support the increased production requirements created by larger orders and new customers.
Supplier Commitments
Meet supplier deadlines where customer payment terms extend beyond the dates on which production costs fall due.
Production Growth
Because availability can increase with eligible invoiced sales, invoice finance can support growing manufacturers.
Seasonal Working Capital
Manage temporary pressure caused by seasonal demand, stock requirements or fluctuating production volumes.
Does Invoice Finance Fund Work-in-Progress or Machinery?
Conventional invoice finance normally releases funding after goods or services have been supplied and an eligible invoice exists. Therefore, it does not usually fund raw materials, work-in-progress or machinery before a completed sale has been invoiced.
Nevertheless, cash released from completed invoices can be reinvested into the next production cycle. Where funding is required before an invoice exists, Go-Factor can consider whether asset finance, trade finance, stock finance, asset-based lending or another working-capital facility may be more appropriate.
Which Engineering and Manufacturing Businesses May Be Eligible?
Invoice finance may be suitable for established manufacturers, growing engineering companies and some new-start businesses supplying goods or services to other businesses on credit terms.
- Precision engineering and component manufacturers
- Fabrication, welding and metalwork businesses
- Industrial and specialist machinery manufacturers
- Automotive, aerospace and transport supply-chain companies
- Electrical and electronic equipment manufacturers
- Packaging, plastics and chemical manufacturers
- Food, beverage and consumer-product manufacturers
- Contract manufacturers and subcontract engineering businesses
What Will an Invoice Finance Provider Assess?
The provider will assess the quality and collectability of the invoices as well as the financial position of the business. In particular, it may examine:
- Customer contracts, purchase orders and payment terms
- Proof of delivery, acceptance and completion procedures
- Staged billing and contractual milestones
- Debtor quality, location and concentration
- Returns, warranties, disputes and credit-note history
- Rights of set-off and contra trading
- Retention-of-title arrangements
- Stock, work-in-progress and production cycles
- Existing borrowing, security and invoice finance arrangements
When Might Manufacturing Invoice Finance Not Be Suitable?
Invoice finance is not automatically suitable for every manufacturer. For instance, availability may be restricted where invoices depend on future performance, customer acceptance or unresolved milestones.
- Invoices are raised before goods or services are supplied
- Most value remains in stock or work-in-progress
- Customer acceptance is outstanding or conditional
- Invoices are regularly disputed or reduced by credit notes
- Warranty provisions create significant rights of deduction
- One customer creates an unacceptable concentration
- Sales are mainly to consumers rather than businesses
- The main requirement is machinery or equipment funding
In those circumstances, another product or a blended funding structure may be more effective. Go-Factor will consider the underlying requirement before recommending a solution.
Factoring or Invoice Discounting for Manufacturers?
Factoring combines funding with credit-control and collection support. As a result, it may suit a smaller manufacturer without a developed accounts function.
By contrast, invoice discounting generally allows the business to retain responsibility for customer collections. It may suit an established manufacturer with reliable reporting, robust financial controls and an effective credit-management team.
Why Engineering and Manufacturing Businesses Use Go-Factor
Go-Factor is an independent UK invoice finance and business funding broker. We help engineering and manufacturing businesses understand, compare and secure funding that reflects their production cycle, customer contracts and working-capital requirements.
We review order terms, production stages, delivery evidence, customer concentration, credit notes, payment terms and growth plans. Subsequently, we compare suitable funding structures and explain the important costs, conditions and restrictions.
Our purpose is not to fit every manufacturer into one product. Instead, Go-Factor helps businesses make better-informed funding decisions based on how they manufacture, invoice and grow.
Learn more about how Go-Factor helps UK businesses with invoice finance .
Engineering and Manufacturing Invoice Finance FAQs
Can manufacturers use invoice finance?
Yes. Manufacturers selling goods or services to other businesses on credit terms may be able to release working capital from eligible unpaid invoices. However, approval depends on the customers, contracts, delivery evidence and facility terms.
Can invoice finance pay for raw materials?
Invoice finance does not normally fund raw materials directly before a sale has been completed. However, funds released from eligible completed invoices can be reinvested into materials and components for the next production cycle.
Can work-in-progress be funded?
Conventional invoice finance generally requires an eligible invoice for completed goods or services. Therefore, work-in-progress may require asset-based lending, stock finance, trade finance or another specialist facility.
Can staged or milestone invoices be funded?
Potentially. The provider will examine whether each stage is contractually complete, accepted and unconditionally payable. Funding may be restricted where further performance or customer approval is still required.
Can machinery be funded through invoice finance?
Invoice finance is secured against eligible receivables rather than machinery. Asset finance may be more appropriate for purchasing or refinancing production equipment. In some cases, both facilities can operate together.
Can Go-Factor review an existing invoice finance facility?
Yes. Go-Factor can review funding availability, concentration limits, service, charges, security and contract terms before comparing suitable alternative providers.
Request Your Engineering and Manufacturing Funding Review
Whether you need to fund a new contract, strengthen working capital or review an existing facility, Go-Factor can help you understand, compare and secure the right funding solution.
Request Your Manufacturing Funding ReviewAll funding is subject to application, eligibility, approval and the provider’s terms. Go-Factor does not guarantee funding.