Call Us Anytime +1 (800) 672-3844
Funding Application
Client Login
Cash flow problems can prevent a manufacturing business from making crucial upgrades to machinery, buying equipment to stay competitive or hiring the experienced professionals needed to succeed. Manufacturing financing can help resolve these issues.
Factoring — also known as invoice factoring or accounts receivable (A/R) factoring — is the sale of pending invoices to a factoring company at a discount. Invoices can be sold once the goods are delivered to the customer. Discounts range from 1% to 5%, depending on the factor and the industry, as well as the number and dollar amount of the invoices. To ensure that the invoices are factorable, it is best to use straightforward billing and avoid tricky-to-monetize arrangements such as progress or contingency billing.
Reach out today and learn about the best funding options for your business.
How Manufacturing Invoice Factoring Works
Keep Commitments to Suppliers And Customers With Predictable, Rapid Funding
Business Factors accelerates cash flow with invoice factoring for manufacturing, turning approved invoices into working capital. Access advances to buy materials, fund payroll, and meet other obligations. We provide flexible limits that scale with purchase orders, helping you keep production on schedule without debt.
Here's how it works:
-
Deliver goods and issue an invoice.
-
Apply with Business Factors; submit invoices and other documents for verification.
-
We verify the invoice and notify your customer of the assignment and remittance.
-
Receive an advance (typically 80% to 90%) wired the same or next day.
-
Use funds to buy materials, fund inventory, cover payroll, and schedule production.
-
When the customer pays, we release the reserve (remaining balance) minus the agreed discount and disclosed fees.
-
Repeat this with each new invoice: funding scales with sales, helping you handle rush orders, longer terms, and seasonal demand.
Costs and Fees
Compare Viable Manufacturing Equipment Financing Options
Every financing option carries distinct costs, timelines, and trade-offs. This section outlines how fees are calculated to compare apples to apples. The data includes discount rates for invoice factoring, APRs for loans and equipment financing, and spreads for asset-based lines. Consider any add-ons that may impact the total cost of capital to weigh the speed to funding and collateral requirements of the different manufacturing equipment financing options.
At Business Factors & Finance, we offer invoice factoring services tailored to your needs. Consider the following solutions below and get a quick quote today.
Collateral:
Accounts receivable/invoices
24 to 48 hours after setup
Collateral:
The equipment plus possible blanket lien
Funding takes days or weeks
Collateral:
SBA-guaranteed but may require additional collateral
Funding may take several weeks or months
How Payroll Factoring Fees Are Structured
In manufacturing equipment finance, factoring costs are a discount fee applied only while an invoice is outstanding. Providers quote this as a monthly (30-day) rate or in weekly increments; typical discounts often fall within 1% to 5% per 30 days, depending on industry and volume. Many funders also structure fees on a weekly/daily basis that maps to actual days to pay.
Sample invoice (for illustration):
Invoice: $300,000 x Advance rate = 85% or $255,000 upfront with $45,000 held in reserve.
Monthly Fee Model
Assume 3.0% per 30 days and a one-time $250 onboarding charge. If the customer pays in 45 days, most providers bill two 30-day periods:
Discount: $300,000 × 3% × 2 = $18,000 One-time onboarding: $250 Total cost: $18,250 (plus any pass-throughs like wire/UCC, if applicable)Weekly Fee Model
Assume 0.75% per week. If the customer pays in 5 weeks:
Weekly fee: $300,000 × 0.75% = $2,250 Total discount over 5 weeks: $11,250 (+ any minor pass-throughs)Important Note: Faster agency/customer payment can lower cost while slower payment raises it. Funding can occur within 24 to 48 hours after setup, and then the reserve is released when payment arrives.
Hidden Fees and How To Avoid Them
Manufacturing factoring offers differ from provider to provider, and some may include add-ons that tend to erode margins. Use this checklist to spot surprise charges:
-
Early termination clauses and auto-renewal windows
-
Monthly minimums or unused-line fees when PO volume dips
-
Bucket billing (full 30-day charges) instead of daily/weekly proration
-
Admin add-ons: due diligence, UCC filing, wire/ACH, lockbox, annual renewals
-
Concentration or slow-pay surcharges on key customers or long aging
Practical Tips To Avoid Hidden Fees
-
Request an itemized fee sheet and sample settlement using your pay timeline.
-
Confirm proration method, reserve release timing, and pass-through caps in writing.
-
Align contract terms to seasonality; negotiate or remove minimums.
-
Verify liens' position/UCC filings and any cross-collateralization.
-
Track statements weekly; dispute errors immediately for on-time reserve releases.
Why Your Business Needs Government Contract Financing
Support Your Production Lines With Steady Cash Flow
Manufacturing financing keeps production on schedule when customer terms stretch. With invoice financing for manufacturing, you convert approved receivables into working capital to buy materials, fund payroll, and cover tooling and onboarding costs. A reliable partner advances cash quickly, letting you fulfill larger purchase orders, manage seasonality, and handle rush jobs without new debt. This flexible funding for manufacturing businesses scales with sales and supports growth across lines and suppliers.
Industries That Benefit From Factoring
Trusted Solutions Tailored to Your Business Model
While funding for manufacturing businesses is often associated with high-volume producers, it also supports contract manufacturers, precision machining, electronics, aerospace/defense, food and beverage, and packaging. When supply chains require upfront cash for various needs, you can leverage factoring to obtain working capital to keep lines running and suppliers paid
Contract Manufacturing
Precision Machining
Electronics and Components
Aerospace and Defense Suppliers
Food and Beverage Manufacturing
Packaging and Printing
Which Model Fits Your Business Needs?
Both of these factoring solutions handle risks and upfront costs differently. Understanding the details of these manufacturing factoring options will help you select the option that best supports your business.
Recourse Factoring
Non-Recourse Factoring
Recourse is typically the lower-cost option; you remain liable if an invoice isn’t paid for non-credit reasons (disputes, returns, documentation issues).
Pros
- Lower discount rates and overall fees
- Often higher advance rates
- Faster approvals, simpler covenants
- Flexible for seasonality, change orders, and partials
Cons
- Requires repurchasing or replacing unpaid invoices
- Exposure to chargebacks, setoffs, and disputes
- Concentration risk remains on your balance sheet
- Cash strain if customers pay late or reject lots
Non-recourse shifts the customer's covered credit risk to the factor. The performance, quality, and paperwork risks typically remain with you, so it is important to clarify definitions in writing.
Pros
- Reduced exposure to customer insolvency or bankruptcy
- More predictable cash planning
- Helpful when revenue is concentrated among a few buyers
- Extra protection when reserves are thin
Cons
- Higher fees; sometimes lower advance rates
- Tighter eligibility and verification requirements
- Standard exclusions: disputes, returns, or documentation defects
- Onboarding and ongoing monitoring may take longer
A Fast Way To Fund Your Project
When delays aren’t an option, we provide fast, reliable working capital through manufacturing invoice factoring and complementary credit solutions. With transparent pricing and optional protections, we keep lines running, meet supplier terms, and scale capacity.
Talk to Business Factors specialists and discover a smarter, more dependable way to fund your operations and growth.
FAQs
-
How fast can I get funded with invoice factoring?
After setup and verification, invoice factoring can be funded in 24 to 48 hours. Depending on underwriting, collateral, and documentation, financing typically closes in days to a few weeks.
-
Which is better for my needs: invoice factoring or manufacturing equipment finance?
Invoice factoring turns receivables into working capital for materials, payroll, and production. Manufacturing financing allows you to acquire or upgrade machinery over time. Many manufacturers combine both to align cash flow and capacity.
-
Will this affect my balance sheet or ownership?
Factoring sells receivables; There is no equity dilution, and it is typically off the balance sheet. Manufacturing equipment finance is a loan or lease secured by machinery; it adds a liability but preserves cash and spreads costs over the asset’s useful life.