How to improve cash flow in a manufacturing business

• Cash flow challenge: I need to fund materials, labour, and energy costs upfront, but my customers won’t pay until production orders are complete.

• Perfect for: Manufacturing businesses that supply wholesalers, retailers, or distributors on extended payment terms.

Novuna helps manufacturers improve cash flow and working capital either through our award-winning in-house service or by comparing providers and making sure you have a great deal for your situation. 

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Five ways to improve manufacturing cash flow

1. Release funds tied up in unpaid invoices: 

Customer payments can take 30, 60, or even 90 days to arrive. Converting invoices into immediate cash gives you the breathing space to cover costs and invest in new orders.

Many manufacturers achieve this through invoice factoring or similar short-term facilities that provide fast access to working capital without taking on long-term debt.

2. Strengthen your payment and credit control processes

Improving how and when you get paid can have a direct impact on your cash position. Set clear payment terms, follow up promptly on late invoices, and use credit checks to manage risk.

Where customers need longer terms, flexible tools like business overdrafts or revolving credit facilities can help you bridge the gap responsibly.

3. Keep inventory lean and efficient

Excess stock ties up valuable cash. Review your production schedule and materials ordering to balance supply with demand.

Manufacturers who plan inventory effectively often rely less on short-term borrowing, while those with seasonal peaks may benefit from inventory finance to smooth out busy periods.

4. Plan ahead with accurate forecasting

Robust cash flow projections give you visibility of when funds will be tight and when you can reinvest. Use forecasting tools to model different production scenarios such as rising energy costs, material price changes, or slower orders and plan accordingly.

This proactive approach helps you avoid sudden funding gaps and builds confidence with suppliers and investors alike.

5. Choose flexible finance that fits your growth cycle

No two manufacturing businesses operate the same way. Flexible finance options such as asset finance or equipment finance can help you invest in new machinery or expand capacity while keeping cash flow steady.

If you’re growing quickly, short-term working capital facilities or invoice financing can support expansion without putting pressure on reserves.

Boost your cash flow Speak to an expert

When manufacturing factoring makes sense

Factoring can be particularly effective for manufacturers because it turns unpaid invoices into immediate working capital. The finance provider advances most of the invoice value upfront and manages payment collection on your behalf.

This approach frees up time, improves cash predictability, and allows you to focus on production rather than chasing payments.

Things to consider before choosing a finance option

• The total cost of funding, including any service or admin fees

• Whether non-recourse factoring might be suitable for added payment protection

• The level of control you want over customer communications and collections

• How funding limits align with your average order value

• Whether complementary solutions like trade credit insurance could add security

How Novuna Business Cash Flow can help

We’ve helped manufacturing businesses across the UK strengthen cash flow, stabilise operations, and invest in future growth. Our facilities are fast to arrange, flexible in structure, and designed to move with the rhythms of your production cycle so you can keep your business running efficiently even when customer payments are delayed.

Speak to our experts today and we will help you find a great fit for your situation.