Manufacturers Benefit From Invoice Factoring
Manufacturing companies tend to be cash flow intensive businesses. Manufacturers have large expenses to deal with. Labor costs is the biggest expense, which includes the wages, overtime, retirement and health benefits. Manufacturers also spend a large percentage of their earnings on inventory costs, which includes the raw materials that manufacturers use to make their products. Third, they have manufacturing overhead expenses which are not directly related to product creation. Instead, they include expenses such as electricity, water, trash removal, rent, maintenance, property taxes and rent. And their fourth major cost is distribution. These companies must ship their products to wholesalers, retailers and through various industrial channels.
The main issue a manufacturer faces is the timing difference between when expenses are made and when payment is received. Invoice factoring accelerates the payment. GMA Factor purchases the manufacturer’s invoice rather than lending money directly to them. Manufacturers that have customers with good commercial credit can qualify.
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