Increase Supply Chain Revenues by Improving Processes

It’s not just about selling more; manufacturers, distributors and other supply chain organizations can increase profits by making strategic improvements throughout their processes.

It’s natural for a manufacturer or distributor who wants to maximize profits or increase revenues to believe that the answer is to sell more stuff. But it is also possible to improve profitability without selling more stuff, simply by lowering costs and increasing efficiency in their operations.

In a retail business, improving the customer experience or making a business run more efficiently might require nothing more than the investment of time in customer service training or moving the customer service desk closer to the front door. But in a manufacturing or distribution business, even small improvements can come with a big price tag, whether it comes in the form of equipment or technology purchases, reorganizing transportation and shipping logistics or re-training employees.

We recently came across an article titled, Getting More For Less Out of Your Logistics Operations which touched on several ways a manufacturer or distributor could improve efficiency and ultimately lower costs as cited in the 24th annual State of Logistics Report (by the Council of Supply Chain Management).

Boost profits by maximizing resources and improving supply chain processes.

Some of the logistics improvements featured in the article included recommendations such as:

• Centralizing purchasing in order to leverage volume discounted buying
• Increasing electronic advance ship notification requirements with both customers and suppliers in order to improve productivity and efficiency in receiving and put-away processes
• Introducing lean logistics methods to increase warehouse capability without expanding storage footprint
• Using lean and six sigma to map product movement and analyzing results to improve performance through more intuitive product placement

The article provided some examples of both how these improvements worked in a real setting or resources (such as software or technology) a manufacturer or distributor could utilize in order to execute these strategies.

What struck us, frankly, is that apart from employee training, which may require nothing more than an investment of time, there are few ways to make significant improvements in the processes in a distribution company or manufacturing business that don’t require a significant amount of working capital. Most supply chain improvements come along with a price tag.

When the key to increasing revenues or profitability for a distributor or manufacturer is working capital, we can help. We offer supply chain finance through the process of Invoice Factoring. Using this supply chain factoring, a manufacturer or distributor can access working capital that would normally be tied up in accounts receivable invoices for weeks (or months) immediately – the same day an invoice is generated – without waiting for their customers to pay.

Supply Chain Financing through Invoice Factoring

Filling customer orders faster and at a lower cost means more profitability for your business.  You can factor receivables and gain access to working capital in order to make improvements to result in more efficient and lower-cost operations.

We offer factoring services for manufacturers and distributors with fees as low as 1% and advances up to 98% of the face value of an invoice. For instance, let’s say that you wanted to introduce a process improvement that would allow you to fulfill 20% more customer orders in the same period of time. The $8,000 in sales you would normally have in a given week could be increased to $10,000 — over the course of a year, resulting in $104,000.00 more in sales.

However, in order to make the improvement, you need to invest $10,000 into new technology for your business, and lack working capital to make this investment while still meeting operational costs. You decide to factor — or sell — $12,000 worth of accounts receivable invoices to non-recourse factoring company My Factoring Brokers, and gain immediate access to 98% of the face value of those invoices.

Cash in hand, you invest in the new technology needed to increase annual revenue by over one hundred thousand dollars at a financing cost of just over one hundred dollars.

Immediate Access to Working Capital: $11,760
Factoring Fee: $120.00
*Reserve Amount: $120.00

(*A Reserve is an amount of money held back until your customer pays the invoice, which is also released back to you (less factoring fee) after the invoice has been paid in full.)

You can use this invoice factoring calculator to find out how much working capital you could unlock by factoring an unpaid customer receivable instead of waiting on payments: 

Supply chain invoice factoring can be a fast, cost-effective way to finance a manufacturing or distribution business when slow cash flow is all that prevents them from executing business growth strategies.

We would be happy to give you a free, no-obligation supply chain financing proposal so you can determine whether unlocking the working capital that is tied down in customer receivables more quickly could help you grow your business more quickly – and boost bottom line revenues in the process.

This type of financing can be ideal for supply chain, logistics, energy/utility, manufacturers, distributors and — often — the vendors and suppliers who serve companies in industries such as:

• Transportation and trucking
• Oil and gas, mining, oilfield, and other energy fields
• Staffing and temporary work agencies
• Cable and telecom installation and construction
• US manufacturing companies, distribution companies and logistics companies
• And many more

Find out more about supply chain finance through invoice factoring by requesting a quick quote. In most cases, we can provide a free, no obligation quote for supply chain business financing in as little as 24-48 hours.