Purchasing Materials for Your Manufacturing Company

February 7, 2019 by CNH Finance, LP in category “Financing”

Manufacturers often face a dilemma when it comes to purchasing raw materials. Day-to-day operations and customer requests frequently place a strain on internal finances. The cost of raw materials, equipment, and labor are not inexpensive, and manufacturers cannot always rely on a positive cash flow to exceed the cost of production. Taking on debt from loans is not a viable solution for manufacturers, but there is a simple way to create a reliable source of working capital.

Sales and Revenue Are not the Same

Manufacturers make a lot of sales and commit to contracts with long-term clients. Receivables may be high, but that doesn’t mean those clients are paying those invoices immediately. This creates a strain on cash flow, and production cannot slow down. In many cases, manufacturers use short-term loans to smooth out finances, but loans can exacerbate an existing and recurring problem. The debt from those loans must be repaid, and if the problem occurs again, manufacturers take a bigger hit to their business credit ratings, and an even larger segment of their capital goes toward paying off liabilities, instead of producing goods for customers.

A Better Source of Capital

Manufacturers have the ability to create a renewable source of working capital without taking on debt from loans. Asset based financing is a revolving line of credit structured around the value of equipment, inventory, vehicles, owned property, and receivables. This source of capital can be used for everything from purchasing materials to smoothing out revenue cycles while waiting for payment from customers. The best part is there is no debt from using asset based financing. Manufacturers can take on large orders, position themselves for growth, and break free of the debt cycle associated with traditional loans. Additionally, as your manufacturing business grows, the amount of financing available through the revolving line of credit will also increase.

CNH Finance is a national leader in asset based solutions for manufacturers. We work directly with business owners to unlock the highest value possible for their assets, so they have the capital necessary to thrive and grow. Contact our offices today to learn more about how asset based financing can boost your manufacturing business.

Image for 'Receivables: Beyond Simply Generating Revenue'
Receivables: Beyond Simply Generating Revenue

To many business owners, receivables are the most important part of any operation. After all, receivables represent all of the work and effort put into customer’s request. They are are…

Image for 'Preserve Credit Ratings and Finance Your Business'
Preserve Credit Ratings and Finance Your Business

Building and preserving business credit ratings can be a challenge, especially if you are seeking additional funding. However, there is a way to get the working capital you need without…

Image for 'Leveraging Assets For Working Capital'
Leveraging Assets For Working Capital

For new and growing businesses, having access to working capital is essential for continued success. However, many entrepreneurs have a tough time accessing the prohibitively high…

Image for 'Fixed Asset Management For Growing Companies'
Fixed Asset Management For Growing Companies

Fixed asset management should be a concern for all growing businesses. Acquiring and keeping track of fixed assets can quickly spiral out of control, which is why we have put together a…

CNH Finance
24 East Ave #1285
New Canaan, CT 06840
Phone: (203) 266-3210

Business Development
Long Beach, CA 90803
Phone: (562) 833-7815

Business Development
3334 E. Coast Hwy, Suite 541
Newport Beach, CA 92625
Phone: (714) 520-1788

Melinda Ficek

Maryland Office
3 Bethesda Metro Center, Suite 723
Bethesda, MD 20814
Phone: (301) 529-9993

Steve Silver

Business Development
5050 Quorum Drive, Suite 700
Dallas, TX 75254
Phone: (972) 687-9157

Rossi Felix