How manufacturing businesses use finance
- Buying or upgrading production machinery and equipment
- Funding raw material purchases ahead of a large order
- Bridging the gap between delivering goods and receiving customer payment
- Expanding factory or warehouse space
- Covering payroll during periods of increased production
- Paying a VAT or corporation tax bill without disrupting supplier relationships
- Refinancing existing machinery finance to improve cashflow
- Funding export orders ahead of payment from overseas customers
Funding types that often fit
- Asset finance
Spreads the cost of machinery and production equipment, using the asset itself as security.
- Invoice finance
Advances cash against invoices owed by business customers, helpful where payment terms of 30–90 days are standard.
- Trade finance
Helps fund the purchase of stock or materials from suppliers, particularly for import-reliant manufacturers.
- Working capital finance
General funding to cover materials and payroll between production and payment.
- Stock finance
Funds inventory purchases ahead of fulfilling a large order.
What lenders look at for manufacturing businesses
Lenders assessing manufacturers typically focus on production capacity and customer reliability:
- Customer concentration and the creditworthiness of key buyers
- Order book visibility and repeat business levels
- Existing machinery finance and whether equipment is owned or leased
- Gross margins and how exposed the business is to raw material price changes
- Bank statements showing the timing of customer payments against supplier costs
Sector challenges: raw material costs and payment terms
Manufacturing has some distinct pressures that shape funding needs:
- Long customer payment terms creating a working capital gap
- Volatile raw material and energy costs affecting margins
- High upfront capital needs for machinery and equipment
- Exposure to currency movements for businesses importing materials or exporting goods
- Lead times between order and production that tie up cash for extended periods
How to prepare a manufacturing finance application
Preparing the right information helps lenders assess the business efficiently:
- Have 3–6 months of bank statements and your latest filed accounts ready
- Summarise your order book, including key customers and contract values
- List existing machinery finance agreements and their monthly costs
- Be ready to explain typical customer payment terms and any late payment patterns
- Outline how new funding would support a specific order or growth plan
Frequently asked questions
Related guides
Indicative only. Subject to lender assessment and approval.
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