Manufacturing and industrial

Manufacturers tie up capital in three places at once: the plant and machinery on the factory floor, the raw materials and components sitting in stores, and the finished goods and invoices generated once a production run is complete. Each stage has a different funding character, and few single facilities cover all three efficiently.

Growth compounds the pressure. A larger order book usually means more raw material purchased up front, longer work-in-progress cycles, and a receivables balance that outpaces retained profit. Businesses that fund this expansion from cash reserves alone frequently find the balance sheet strained just as trading improves, which is when external funding becomes most valuable and, paradoxically, hardest to arrange under time pressure.

Asset finance — hire purchase, leasing or sale and leaseback — is the natural fit for capital equipment, since the machinery itself provides security and repayments can be matched to its useful life. Export credit agency support often extends tenor and reduces margin on imported production equipment, particularly for capital goods sourced from Germany, Japan, South Korea or the United States.

Working capital is best addressed separately: import finance or supplier-backed letters of credit fund raw material purchase, while receivables finance or selective invoice discounting releases cash once goods are shipped and invoiced. Combining these lines, rather than seeking one facility to cover everything, generally produces better advance rates and pricing than a single undifferentiated overdraft.

Lenders to manufacturers look closely at gross margin stability, customer concentration and the age and specification of existing plant, since resaleable, mid-life equipment supports higher leverage than bespoke or near-obsolete machinery. Order book visibility matters more than historic turnover alone, particularly where a single customer represents a large share of revenue.

Covenants typically reference stock turn, debtor days and minimum tangible net worth, with more restrictive testing where inventory is a large proportion of the borrowing base. Cross-border supply chains introduce an additional layer of counterparty and documentary risk that trade finance providers will price and structure around rather than ignore.

The most frequent cause of delay is incomplete management information: manufacturers often hold detailed production data but weak consolidated financial reporting, which slows underwriting. A second common issue is presenting a single facility request when the underlying need actually spans equipment, stock and receivables, leading to a mismatch between the product sought and the risk being funded.

Applications also stall where existing asset finance or bank security has not been mapped against the new request, creating avoidable priority and consent issues late in the process.

GFG separates the equipment, stock and receivables elements of a manufacturing funding requirement at the outset, and identifies which lenders are positioned for each. Existing security and facility documents are reviewed early to flag consent or priority issues before terms are issued, reducing rework later in the process.

Where several products are needed, GFG coordinates delivery across providers so facilities complete on a compatible timetable. No fee is payable until funding is in place.