In the face-paced world of fashion, apparel manufacturers often have high volume orders of specific lines of clothing. This can often be unpredictable and completely market driven by the latest in trends, fashion styles and with specific types of marketing campaigns. When these orders come in apparel manufacturer invoice factoring can provide the opportunity to create cash flow without having to wait for vendors to pay invoices.
There are several different types of groups or companies within the fashion industry who can benefit from apparel manufacturer invoice factoring. The most common companies routinely accessing this source of funding include clothing manufacturers, textile and fabric manufacturers, weavers and garment companies themselves.
The Process
Unlike going to the bank or trying to obtain a small business loan, apparel manufacturer invoice factoring is a very simple and straightforward process.
The process of apparel manufacturer invoice factoring is selling already closed invoices, or accounts receivable, to a factoring company. The factoring company then provides funding based on those accounts receivables. A company can choose to sell some or all of their accounts, it is their decision.
The company offering the apparel manufacturer invoice factoring service then provides the manufacturer with a percentage of the total of the accounts receivable collected. This is typically a significant percentage of up to 80% or more.
Once the factoring company has collected the final payment from the buyer, any residual balance is provided to the clothing manufacturer less the pre-established fees the factoring company retains.
The Benefits
The most obvious benefit to apparel manufacturer invoice factoring is the immediate cash flow the sale of the accounts receivables provides. However, this is not the only benefit to consider.
To companies offering apparel manufacturer invoice factoring also provide online access to account information, allowing the clothing or textiles producer to have immediate and 24/7 information about their account, helping with budgeting, managing cash flow, and ensuring the opportunity to continue to take on new business.
