Map the cash cycle before choosing a product
Cash leaves when raw materials are bought and does not return until the finished goods invoice is paid. In many manufacturing businesses that is a hundred days or more. Break it into stages: procurement, production, finished stock, receivable. Each stage has a funding instrument built for it.
The common mistake is stretching one facility across all four. An overdraft sized for the receivable stage will never cover the procurement stage, and the business ends up permanently at the limit.
Funding the machinery
Hire purchase and finance leases spread the cost of plant across its working life, usually three to seven years, with the asset itself as the security. New and used equipment are both financeable, though used machinery attracts shorter terms and a valuation.
Existing owned plant can also release cash through refinance or sale and leaseback. This is one of the cheapest sources of capital available to an established manufacturer, because the security is already in the building.
Funding materials and stock
Trade finance and import lines cover payment to suppliers, including overseas. Inventory finance then funds raw materials and finished goods while they sit in the warehouse, typically advancing thirty to sixty per cent of cost against controlled and valued stock.
Work in progress is the hardest stage to fund because part finished goods have limited resale value. Some asset based lenders will include it at a low advance rate where production runs are short and costing is reliable.
Funding the receivable
Once the invoice is raised, receivables finance releases eighty to ninety per cent immediately. For manufacturers selling to large retailers or prime contractors on long terms this is usually the single largest source of working capital available.
Where those buyers run supply chain finance programmes, early payment at the buyer credit rating is normally cheaper still and worth asking about directly.
Combining the layers
The efficient structure for a mid sized manufacturer is an asset based package: a revolving line against receivables and inventory, term debt against plant and property, and a trade line for imports, all documented together so security does not conflict.
Arranged separately these facilities fight each other. Arranged together they fund the entire cycle at a blended cost well below a single stretched overdraft.
Frequently asked questions
Can I fund a machine that is already installed?
Yes, through refinance or sale and leaseback, provided it is unencumbered and holds resale value.
Is work in progress fundable?
Sometimes, at low advance rates, and usually only inside a wider asset based facility with reliable costing data.
How long does an asset based package take?
Six to twelve weeks typically, since it involves valuation, a field examination and full security documentation.
Last reviewed: 2026-09-01