The current economic climate means that food and drink manufacturers are facing some unique challenges. Labour shortages, margin squeezes, Brexit, soaring commodity costs and the Ukraine war have created huge pressure on margins. The recent inflationary pressure is also impacting disposable income for consumers, and no-one can be certain when that will level out. With all these challenges to contend with, many in the food manufacturing sector are having to ensure they have adequate cash flows and investment to survive these current challenges.
Luckily, business finance specialists agree that there is money to access for the food manufacturing sector, with a range of options available to both large and small food and drink manufacturers.
Let’s take a look at the business funding options that are available, and how the right finding can help food manufacturing businesses to not only survive, but thrive.
Due to the current labour shortage, food manufacturers are increasingly looking at ways to automate production. Asset finance can make this possible as it is the ideal funding option for any business requiring machines and equipment.
Asset finance allows a business to purchase the assets they need even if they don’t have the cash upfront. The asset will be financed using an asset finance facility, allowing businesses to retain their cash and pay for the assets over time in smaller, affordable payments.
Food manufacturing firms could also benefit from asset refinancing. With asset finance, you use your current assets as collateral to open up some cash for your business. You sell the asset to your financing company, retaining enough ownership of the asset to use it as usual for your business. You then repay the amount loaned to you in instalments over a set amount of time, but in the meantime you will have freed up some cash.
Invoice Finance can be a useful funding option for the food manufacturing sector. A healthy cash flow is imperative to the ongoing success and growth of any business, but in today’s economic climate especially, some companies will take full advantage of the repayment terms offered and it can take months for them to settle what they owe. This in turn leaves cash flow strained and suppliers left unpaid.
Invoice financing helps food manufacturing companies to manage cash flow by bridging the gap between the point of sale and the time payment is received from the debtor. It means you can avoid the usual wait for invoices to be paid: invoice finance ensures you get most of the cash immediately, so you don’t have to wait to get paid.
Food manufacturers could even be able to access funding for premises, via commercial mortgages and secured loans. There may also be refinance options available for existing property assets which can help to free up cash when it’s needed.
How PMD can help with funding for the food manufacturing sector
PMD works with over 150 lenders and can open up a number of flexible, independent and competitive funding lines to drive your food manufacturing business forward.
PMD takes the hard work out of securing business finance, liaising with funders on your behalf to ensure the best possible terms are secured, leaving you free to focus on running your business.
If you work in food manufacturing and are considering business finance options, get in touch today to see how PMD can help.