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MANUFACTURING INVOICE FACTORING

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Financing Options for Companies in the Manufacturing Industry

In the manufacturing sector, especially those applying for the CHIPS Act, extending long-term payment plans is a strategic approach to remain competitive, incentivize larger orders, and foster strong client relationships. However, given the often narrow profit margins, manufacturers face significant expenses, including procuring raw materials, prepaying subcontractors and suppliers, acquiring equipment, leasing facilities, and compensating employees. These financial demands can strain cash flow, making it challenging for companies with limited liquidity to offer trade terms.

Manufacturing invoice factoring, also referred to as accounts receivable factoring, presents an effective solution by enabling manufacturers to extend attractive payment terms to clients while preserving a robust cash flow. This financing option ensures that businesses can sustain operations and drive growth without compromising their financial stability.

What Is Manufacturing Invoice Factoring?

Manufacturing invoice factoring is a business funding strategy that allows manufacturing companies to access immediate working capital by selling their accounts receivable, unpaid invoices, to a third-party company, known as a factoring company.

In the manufacturing industry, companies frequently experience cash flow challenges due to the lag between completing a product or service and receiving customer payments. This delay is often extended due to the multiple stages involved, including production, shipping, and distribution.

Invoice factoring with manufacturing factoring companies helps address this cash flow gap by providing an immediate access to working capital.

Problems with cash flow can interrupt your business and stop business growth in its tracks. Accounts receivable factoring for manufacturing companies gives you fast access to the capital you’ve already earned via your outstanding receivables. It doesn’t matter what you manufacture, if you need access to working capital, Rivier Finance can help: 

  • Electrical Equipment
  • Metal Fabrication
  • Medical Equipment
  • Computer and Electronic Products
  • Machinery
  • Chemicals
  • Transportation Equipment
  • Aerospace

How Manufacturing Factoring Works

Here’s how factoring for a manufacturing company typically works:

  1. The manufacturing company delivers their products or services to their customers and generates an invoice for the amount owed.
  2. Instead of waiting for the customers to pay, the manufacturing company sells those invoices to a factoring company like Riviera Finance at a discounted rate. The discount rate, also known as the factor rate, is usually a percentage of the total invoice amount.
  3. The manufacturing factoring service pays the manufacturing company a significant portion (usually around 70% to 90%) of the invoice value upfront, providing immediate working capital. Riviera Finance offers competitive rates.
  4. The factoring company takes over the responsibility of collecting payment from the manufacturing company’s customers. 
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Our Process

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STEP 1

Apply

Complete form & become a Riviera client

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STEP 2

Service

You deliver your products or services

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STEP 3

Send

Send your invoices to Riviera Finance

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STEP 4

Get Paid

Riviera verifies & pays you within 24 hours

Factoring vs Other Types of Funding

There are many ways to fund your business. However, factoring has some key advantages over other common financing options. For example, it’s common to apply for a line of credit from a bank. To qualify for credit, you’ll need to show the bank your assets, which include cash as well as equipment. Smaller and newer businesses often have trouble getting enough credit to meet their needs.

ACH and MCA loans are another option you might consider. Automated clearing house (ACH) and merchant cash advance (MCA) loans are usually easy to qualify for. The downside is that interest rates and lender fees are very high. This can lead to a downward spiral of debt that makes it hard to run a profitable business.

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Manufacturing Invoice Factoring Benefits

Manufacturer factoring offers several advantages to manufacturing companies. Here are some of the key benefits of manufacturing factoring:

  1. Improved Cash Flow: One of the primary benefits of invoice factoring services is the immediate infusion of cash it provides. Rather than waiting for customers to pay their invoices, you can access funding for the invoice value upfront. This helps bridge the cash flow gap and provides funds to cover operational expenses, such as raw materials, payroll, and other immediate financial obligations.
  2. Quick and Easy Access to Funds: Manufacturer invoice factoring is typically a fast and straightforward process compared to traditional financing options like bank loans. Once you have an established relationship with a factoring company, subsequent funding can be obtained quickly, often within a couple of business days. This rapid access to funds can be vital for manufacturers who need to seize business opportunities, fulfill orders, or address unexpected expenses promptly.
  3. No Debt Incurred: Unlike a loan, invoice factoring does not create debt. It is not a form of borrowing, but rather a sale of accounts receivable. This means that your business is not taking on additional financial liability or burdening its balance sheet with debt. Manufacturer invoice factoring can be a useful option for companies that want to avoid traditional debt financing, or that do not qualify for traditional bank loans.
  4. Flexible Financing Option: Invoice factoring provides flexibility. The funding amount is based on the value of the invoices, allowing your business to access funds in proportion to your sales volume. As your company grows and generates more invoices, the available funding can increase accordingly. This scalability makes invoice factoring an adaptable financing solution that can support the changing needs of your business.
  5. Outsourced Accounts Receivable Management: When invoices are factored, the factoring companies for manufacturing take over the responsibility of collecting payments from customers. This relieves you of the administrative tasks and costs associated with accounts receivable management, such as invoicing, tracking payments, and collections. By outsourcing these functions to the factoring company, you can focus on your core competencies and save time and resources. (If this concerns you, see how we work with your customers.)

It’s important to note that while the manufacturing invoice factoring process offers numerous benefits, each company’s situation is unique. Be sure to carefully evaluate the costs, terms, and reputation of the factoring company before entering into a factoring agreement to ensure it aligns with your specific financial needs and goals.

Benefits of Invoice Factoring

Riviera Finance works with a variety of companies in the US and Canada to help them maintain cash flow and meet weekly financial demands.

Immediate Cash

Our process is built around immediate response to client needs, and the best cash turn around in the industry.

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Competitive Rates and No Hidden Fees

Financial Freedom

No Debt is Created

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Riviera takes on all the credit risk!

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Manufacturing Invoice Factoring

How Does Invoice Financing for Manufacturers Work?

Invoice financing for manufacturers works by using unpaid invoices as collateral to access immediate cash flow. You submit your outstanding invoices to a factoring company, who gives you an advance on the value of your unpaid invoice. You put your money to work immediately, while the factoring company works with your customer to settle the invoice according to the original payment terms.

The CHIPS Act for America

What is the CHIPS Act? The CHIPS and Science Act was a bipartisan bill signed into law in August 2022. Among its objectives were to strengthen the economy, revitalize the American semiconductor industry, and boost national security. CNBC quotes government officials as saying the goal is to “lure in as much private investment as possible while boosting supply chain resilience and economic security by funding U.S.-based facilities in areas like materials and packaging.”

CHIPS Act funding is a real opportunity for smaller companies in the tech sector to grow as they contribute to national security and America’s position as a leader in the semiconductor market. As funding is expected to conclude by the end of the calendar year, applicants need to move quickly.

Riviera Finance will help with funding for those who support facilities for this industry, including transportation, construction, facility workers, AC, concrete, among others. Contact us online for a free, no obligation consultation today. 

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