Working capital challenges in the manufacturing industry

TCF Admin

January 21, 2016

Even when a manufacturing company has a healthy asset position and is profitable, they can have liquidity problems with insufficient working capital. Working capital represents the short-term assets available to a business to meet financial obligations. But because supplier and production expenses are often required to be paid several months before goods are actually sold to customers, manufacturing companies often deal with working capital challenges.

So how are companies dealing with the challenges of current assets being less than current liabilities? Many manufacturing companies are turning to asset financing, or asset-based lending. An ongoing challenge for any manufacturing business is to alleviate the delayed timing between spending resources for producing goods and receiving payment when those products are sold. Even when a sale is made, the manufacturer may not get the payment immediately. Extended payment terms and slow-paying customers both translate to a potential cash-flow shortfall until payments are received.

The accounts receivable represent funds that are due to a business but are currently unpaid. In Triumph Commercial Finance’s eyes, the accounts receivable are assets with real value. Asset-based lending allows manufacturers to receive funds from their accounts receivable before the customer has paid. This can be a timely solution for businesses that deal with excessive delays in receiving payments.

Triumph Commercial Finance offers asset-based lending for companies with working capital challenges. Our specialization is working with small to mid-size companies. For some manufacturing companies, the amount of working capital needed is comparably small, and larger banks won’t consider deals of that size. But we work with you to tailor a plan that works for your business. Simply put, Triumph Commercial Finance has the insight and expertise to understand what it means to need accelerated cash flow to support your working capital needs.