Inventory cycle
Raw materials and work-in-progress can absorb cash for weeks or months before customer payment.
Manufacturing
Funding around inventory, production, equipment and customer terms.
Manufacturers often commit cash to materials, labour and production well before finished goods convert back into cash. Planned funding can be assessed around inventory, equipment, tax liabilities and defined growth initiatives.
What matters
Start with the commercial reality.
Funding should address a defined business need and sit within a credible plan for the company after the facility is advanced.
Equipment
Maintenance, tooling, production upgrades and new capacity can require concentrated capital investment.
Customer terms
Large customers may negotiate long payment terms, increasing working-capital requirements as production scales.
Map inventory and WIP
Prepare raw materials, work-in-progress and finished-goods balances together with inventory turns and major supplier terms.
Show unit economics
Revenue growth is not enough. Gross margin, labour efficiency, scrap/rework, production capacity and debtor timing affect the cash requirement.
Plan equipment investment
For growth funding, show the cost, installation timeline, production benefit, customer demand and expected payback of equipment or automation.
Separate operating and tax pressure
If ATO debt exists, identify whether it arose from inventory growth, customer timing or an underlying operating deficit.
Official sources & further reading
General information only. This page does not constitute legal, tax, financial or credit advice. SME Capital Partners is in pre-launch and is not currently offering or approving credit through this website.