For many of our clients in the manufacturing industry, the past few years have been difficult and 2022 is proving to be no exception. Two of the main challenges are supply chain instability and workforce shortages. On top of these challenges, manufacturers are funding materials, supplies, equipment, and the actual production of their product, all, before invoicing a client. An invoice is issued after the work is completed and delivered to the customer, and some invoices are discounted or have extended terms. To remain competitive and garner customer loyalty, many manufacturers offer clients longer-term invoice payment plans and wait for 120 days plus to get paid by their customers or encourage clients to order more products to receive a lower rate.
Workforce Shortages
In today’s economy, attracting and retaining employees can be difficult and, at present, many employers are unable to fill needed positions. This can put a strain on manufacturing companies trying to fill orders and meet deadlines. Some manufacturing companies have decided to optimize their production line by incorporating innovative technology, while others are improving worker satisfaction by increasing compensation, offering bonuses, or finding other creative ways to incentivize employees.
Supply Chain Disruption
Supply chain disruption is also a major issue for manufacturers. Some indicators are signaling the disruption will ease in the second half of 2022, while others looking into the crystal ball are stating that the disruption will continue for years to come. Given this uncertainty, business leaders often need to make rapid decisions to sustain operations and continue to serve customers. Manufacturers are continuously monitoring their suppliers, anticipating problems, and quickly adjusting to this new normal.
Our Manufacturing Clients
At Porter Capital, we have numerous manufacturing clients seeking funding and are working with them to ease the financial pressures and sustain business growth. These are a few examples of our manufacturing clients:
- Aluminum Extrusion and Processing: Manufacturing company extrudes aluminum from Mexico, ships it to the United States for machining and coating, and then on to the seller. The metal can be used to create fences, windows, doors, hurricane shutters, and auto parts, to name a few. The company has to pay upfront for aluminum but wait months for payment from the purchaser and this created a cash flow problem.
- Paperboard Food Packaging: Our client provides packaging for beverages, food, health, and beauty supplies, as well as hardware and industrial packaging. To remain competitive in this market, the client has offered longer payment terms to customers but still needs to bulk purchase supplies and meet payroll.
- Snack Manufacturers: From edible cookie dough to cracker and chip manufacturers, our clients create great snacks. We even have clients creating snacks for our four-legged friends. These manufacturers come to us because margins are often tight, and they need to purchase new equipment or are having difficulty making payroll.
Conclusion
The speed with which key financial decisions need to be made may not allow for a traditional bank loan timeframe and this is when Porter Capital can help. Porter Capital provides working capital solutions in a matter of days, not months. Invoice factoring allows our clients to continue offering competitive terms to their customers, meet payroll, buy new equipment, and grow their manufacturing businesses. At Porter, we take pride in helping our manufacturing clients and we would welcome the opportunity to work with you.
