Business finance for textile & clothing manufacturers

Fabric in first, payment on delivery

Textile and clothing manufacturing carries a material-heavy, front-loaded cash cycle. To make an order you first buy the fabric and trims — cloth, yarn, interlinings, zips, buttons, thread, labels and packaging — usually committing to the whole quantity up front, sometimes with deposits, and frequently against minimum order quantities or roll lengths that mean buying more than the job strictly needs. Then come cutting, making, finishing and labour, before the garments are delivered and only then invoiced — with the customer paying on terms after that.

So the money goes out at the very start of the job and comes back at the very end, often months later. The more orders in production, the more cash is tied up in fabric and work-in-progress at once. Material prices move with cotton, wool and synthetic markets and with currency, so a job can cost more to buy for than quoted. A capable manufacturer with a full order book can still be cash-tight, because its capital is locked into cloth and part-made garments waiting on delivery and payment. Working capital is what bridges that fabric-to-payment gap.

Funding a production run

The cleanest use of finance in this sector is funding a confirmed production run. When a customer places a firm order — a retailer, brand, workwear buyer or wholesaler — you typically have to buy all the fabric and trims and fund the cut-make-trim labour up front, well before the finished goods are delivered and paid. The order is signed and profitable; the only constraint is the cash to resource it.

Working capital removes that constraint. With a purchase order or supply schedule in hand, a facility lets you buy the cloth and components, fund production through to delivery, and repay as the customer pays. It means the size of order you can accept is set by your capacity and quality, not by how much fabric you can fund out of cash on hand — which is exactly what lets a manufacturer take on larger, repeating contracts and grow with its customers rather than turning down volume it can produce but not yet finance.

Seasonal ranges, minimums and machinery

Fashion and seasonal apparel add a timing dimension. To have a seasonal range ready for a retailer's launch window or a buying season, you commit to fabric, trims and production months ahead of the orders shipping and being paid — a long stretch with significant cash tied up before any return. Get the timing wrong and you either miss the season or carry unsold stock; a facility sized to the range lets you produce to the calendar with confidence and repay as the season's orders settle.

Buying economics and capacity matter too. Minimum order quantities and volume pricing on fabric mean larger buys earn better rates and secure supply, but only pay off if you can fund the quantity. And machinery — modern sewing and overlock lines, cutting tables, knitting machines, embroidery, printing or finishing equipment — lifts capacity, quality and margin, but earns nothing until it's installed and running across orders. Both are natural fits for finance: bank the volume saving, or repay the machine from the work it produces.

What to weigh up before you borrow

Test the decision against your real orders, materials and terms:

• Tie it to confirmed work. The strongest case is funding fabric and production for a signed order or seasonal commitment from a known buyer — borrow against evidenced demand, not speculative stock.
• Mind material-price and receivables timing. Allow for cloth-price and currency movement on a quoted job, and match the facility to the gap until the customer actually pays.
• Bank the volume and seasonal benefit. Where minimums or volume buying improve the cost, or producing to season protects the sale, factor that against the cost of the finance.
• Total repayable and early settlement. Get the full figure up front and check you can clear it early once an order or range is delivered and paid.

This is general information, not advice on your specific accounts — model it against your own numbers or with your accountant.

How company-only short-term finance fits

Credicorp lends to the limited company behind the manufacturing business, with no personal guarantee — the facility is the company's liability, so your home and personal assets aren't pledged against it. As an exempt business lender providing working capital rather than regulated consumer credit, the focus is on how the firm trades, which suits a make-to-order operation buying materials ahead of delivery-based invoicing.

For a defined need like a large fabric buy or new production machinery, a business loan gives a clear lump and schedule. For the order-and-season rhythm of buying cloth and funding a run to its first payments, the revolving Credicorp Flex line lets you draw only what each order needs and repay as customers settle. You can apply online to see indicative terms first.