Business finance for manufacturers

Where the cash gets trapped

Manufacturing is a working-capital business. You buy raw materials, pay shop-floor labour and run machines for weeks or months before a finished order ships — and then you wait again while the customer takes 60 or 90 days to settle the invoice. Every stage of that cycle ties up cash: raw materials on the shelf, work-in-progress on the line, and finished stock in the warehouse.

The faster you grow, the worse the squeeze. Winning a larger order means buying more steel, polymer, components or packaging up front, often at a moment when last quarter's invoices are still unpaid. Profitable manufacturers regularly run short of cash precisely because demand is strong — the order book grows faster than the bank balance.

Pressures specific to manufacturing

A few things make manufacturers' cash flow harder than most sectors:

• Material price volatility — metals, plastics, energy and freight can move sharply, so a quote priced months ago can be funded at a higher cost today.
• Minimum order quantities — suppliers often require bulk purchases or container loads, forcing a large outlay before you have matching sales.
• Long lead times on imported components mean you commit cash early to protect the production schedule.
• Tooling, moulds and setup costs for a new product line land before the first unit is sold.
• Energy-intensive processes mean rising utility bills hit before they can be passed through in pricing.

None of this shows up as a loss — it shows up as a timing gap between paying out and being paid.

Typical uses of short-term funding

Manufacturers most often use a short-term facility to:

• Buy a bulk run of raw materials or components to fulfil a confirmed order.
• Bridge the gap while customers on 60–90 day terms settle their invoices.
• Cover payroll and overheads through a seasonal or production lull.
• Fund tooling, moulds or a setup for a new contract before revenue arrives.
• Take advantage of a supplier early-settlement discount that pays for itself.

This is distinct from financing a major machine or a factory unit, which is usually a long-term asset-finance or commercial-mortgage decision. Short-term working capital is about keeping the production cycle turning, not buying fixed assets.

Company finance with no personal guarantee

Credicorp business finance is short-term working capital lent to your limited company, not to you as a director. There is no personal guarantee — the obligation sits with the business, which keeps your home and personal assets out of the arrangement. That structure suits manufacturers who already have personal exposure tied up elsewhere and want to keep the company's funding ring-fenced.

For an ongoing, drawdown-style line that flexes with each production run rather than a single lump sum, Credicorp Flex can sit alongside your bank arrangements. Credicorp is an exempt business lender providing finance to UK companies.

What to weigh before you borrow

Short-term finance is a tool for a timing problem, not a fix for a margin problem. Before borrowing, sanity-check a few things:

• Match the term to the cash cycle. If a customer pays in 75 days, borrowing that bridges roughly that window is sensible; financing a structural shortfall over months is not.
• Cost the order, not the loan. A facility that lets you accept a profitable contract you would otherwise turn away can pay for itself; one used to subsidise loss-making work will not.
• Keep visibility. Know your true cash conversion cycle — days of stock, plus days to be paid, minus days you take to pay suppliers.

This page is general information, not financial advice. Apply or model a facility when you have a specific need in mind.