Manufacturing Factoring: Bridge the Gap Between Production and Payment
OEM payment terms of 45 to 90 days force manufacturers to carry the cost of production while waiting on customers. Invoice factoring converts your completed delivery invoices into immediate working capital—so your operation never has to wait.
The Manufacturing Cash Flow Challenge
In the manufacturing supply chain, the payment cycle creates a persistent working capital problem. You purchase raw materials, fund labor, run equipment, and deliver finished goods—often 30 to 90 days before the OEM, distributor, or retailer pays your invoice. During that gap, you're essentially financing your customer's production costs with your own capital.
For manufacturers serving automotive OEMs, aerospace prime contractors, or large retail buyers, this gap can stretch to 90 days or more. And as revenue grows, the gap grows with it: a manufacturer scaling from $2M to $5M in annual sales needs proportionally more working capital to fund the larger production cycle.
Invoice factoring addresses this directly. By converting your delivery invoices into cash within 24 to 48 hours, you eliminate the cash flow gap that slows growth and creates financial stress.
How Manufacturing Factoring Works
The process aligns naturally with a manufacturer's billing cycle:
- Complete production, ship goods, and invoice the buyer (OEM, distributor, or retailer)
- Submit the invoice and proof of delivery to the factoring company
- Receive 80–90% of the invoice value within 24 to 48 hours
- Use the advance to purchase raw materials for the next order, fund payroll, or cover overhead
- When the buyer pays, receive the remaining balance minus the factoring fee
Manufacturing Sectors We Serve
Our factoring network has served manufacturers across dozens of sectors:
- Automotive parts and components — Tier-2 and Tier-3 suppliers to Ford, GM, Stellantis, Toyota, and Honda
- Aerospace and defense components — Precision machined parts, avionics, and assemblies for prime contractors
- Food and beverage manufacturing — Processors and packaged goods producers selling to distributors and grocery chains
- Metal fabrication — Steel and aluminum fabricators delivering to industrial buyers
- Plastics and composites — Injection molders and composite fabricators supplying to multiple industries
- Textiles and apparel — Manufacturers supplying to national retailers and brands
Advance Rates and Fees for Manufacturers
Manufacturers typically qualify for:
- Advance rates of 80–90% of invoice face value
- Factoring fees of 1.5–3% per month
- Invoices to Fortune 500 buyers and government primes often qualify for the lowest rates in this range
Frequently Asked Questions
Can I factor invoices to my largest OEM customers?
Yes—invoices to creditworthy OEMs and large manufacturers are often the easiest to factor. Their size and credit strength make them ideal factoring clients.
Does factoring work alongside my existing bank line of credit?
Yes—factoring can operate alongside bank credit. Some manufacturers use factoring for specific customer receivables while maintaining a bank line for other purposes.
Can I factor export invoices from my manufacturing business?
Domestic and some international invoices can be factored. International invoices require additional documentation and may involve export factoring with different structures.