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• 29 May

  Finance For Manufacturers Becomes More Difficult.

  Manufacturers are finding it more difficult to get access to the finance that they need, according to research by Wyelands Bank, published in Business Money (14/05/19).

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  Manufacturers Face More Difficulties Raising Finance

  The article suggests that of businesses turning over between £10M and £300M, nearly half (46%) said that they had faced challenges raising the finance that they needed. Furthermore, nearly 1 in 3 manufacturing companies said that they had found raising finance to be more difficult than it was 3 years ago. A concerning trend, that will impact growth.

  The article went on to explain that there were significant consequences, as a result of this situation. On average, each manufacturer said that they had missed out on £20M of revenue, across 11 contracts that would have led to the additional employment of 10 people.

  When those lost opportunities to create new jobs are aggregated, across the mid-sized manufacturing companies in the UK, that could account for some 175,000 jobs that have not been created, due to these financing problems.

  Receivables Financing As An Available Option

  The article outlines how 64% prefer not to give up any equity in order to raise funding, however, some 34% of those have had to consider it. This would suggest a clear preference for debt-based funding, such as receivables financing, over equity-based products from within the full range of business financing options that are available.

  Receivables financing is an ideal funding solution for manufacturers, as evidenced by the fact that more than a quarter of the UK Finance member's (formerly the ABFA) clients operate within the manufacturing sector. This type of funding works well with products that can be considered simple in nature i.e. "sell and forget", without ongoing contractual obligations. Even with these kinds of ongoing issues, there may still be options available, evidenced by a recent customer for whom we found funding, despite having sale or return trading terms.

  The availability of invoice discounting solutions (funding only without credit control, or even disclosure in some cases) is also often well-suited to businesses of this size. However, a lack of knowledge about the range of options available, and how easy it can be to access this type of funding, can cause businesses to overlook this option.

  By Glenn Blackman