Lines of Credit Can Keep the Cash Flowing in Your Manufacturing Business

Working capital is always a challenge for manufacturing businesses, especially since you have to pay promptly for needed materials, while customers may not pay you for several months. One of the very best ways of handling this situation is through business lines of credit, which can help maintain cash flow, even during times of sparse incoming revenue.

Establish a plan to generate working capital

To help establish your eligibility for business lines of credit, there are some steps you need to take which will make your business more attractive to lenders. First you should prepare a sales forecast and a forecast for your cash flow, which provides an estimate of incoming revenues. Then you should do whatever’s possible to increase the flow of incoming revenue, possibly by offering discounts to your customers for quicker payments.

You should also reduce expenses as much as possible, using modern manufacturing methods such as lean manufacturing. You should prioritize the management of your working capital, monitoring it very carefully, and comparing it to industry standards. Even when you are flush with cash, you should be carefully monitoring income and expenses.

Advantages of business lines of credit for manufacturing

Compared to a traditional business loan, business lines of credit can be much more useful and much more flexible. First of all, the sheer convenience of having the cash on hand when it’s needed is priceless, because it allows you to react to unexpected orders very quickly. With a traditional business loan, you’ll have to start paying back the borrowed amount immediately.

However, with business lines of credit, you don’t really start paying back anything until you’ve used some portion of the available balance. You also won’t have to explain to a traditional lender what you intend to use the money for, because with a business line of credit, you can literally use any portion of your available balance for any reason whatsoever.

Lines of Credit with Fintrus

Almost every business would be better off financially with lines of credit, and in that area, we may be able to offer financial assistance. Contact us at Fintrus to find out if your company might qualify for a business line of credit which will help keep your company operating smoothly.

SHARE IT: LinkedIn