For a make-to-order manufacturer, the cash problem starts long before there is anything to invoice. You win a large contract, place a deposit on a casting or a control system with a sixteen-week lead time, buy steel and bought-in parts, and then spend weeks turning all of it into a finished assembly. Only at the end does an invoice exist. The standard working-capital tool — invoice finance — advances against that invoice, which means it does nothing for the three or four months when your money is locked up in deposits and half-built product. That gap is where long-lead manufacturers run out of cash, and it has its own set of funding answers.
The cash cycle is the whole problem
A job-shop or contract manufacturer running a long build carries cash out in a specific sequence. Supplier deposits go first, often before any material arrives, because specialist component makers and overseas suppliers want money down to start. Raw material and bought-in parts follow. Then labour and machine time accumulate as the job moves across the shop floor. The customer pays last, frequently on delivery or on extended terms, and may hold a slice back until commissioning or sign-off.
The longer the lead time, the wider the gap and the more cash is tied up in work in progress at any moment. A business taking a single £400,000 fabrication might have £150,000 sunk in materials, sub-assemblies and supplier deposits weeks before it can raise a penny of invoice. Win three of those at once and standard facilities buckle, not because the business is unprofitable, but because profit is trapped inside uninvoiced WIP. This is the failure mode that catches growing manufacturers: the order book is the strongest it has ever been, and that is exactly why there is no cash.
Funding the front of the cycle: trade and supplier finance
The front end — paying suppliers before you can bill anyone — is what trade finance is built for. Two structures matter for manufacturers.
- Purchase-order and contract finance advances against a confirmed customer order. The funder pays your suppliers directly for the materials and components needed to fulfil it, so you can buy what the contract requires without draining your own cash, and the facility unwinds when you deliver and invoice. It lets you accept an order that is larger than your current balance sheet would otherwise allow.
- Supplier-deposit and pre-payment finance specifically funds the deposits and stage payments that long-lead suppliers demand up front — the casting, the bespoke control panel, the imported sub-assembly with a four-month lead. This is the part conventional lending ignores, because there is no asset on your floor yet and no invoice to discount.
Both work because the lender underwrites the strength of the confirmed order and the creditworthiness of your customer as much as your own balance sheet. A firm order from a blue-chip buyer is good collateral even when your management accounts look stretched. The trade-off is honest: these facilities cost more than discounting an invoice, because the lender is funding goods that do not exist yet and carrying delivery and performance risk. You use them to take on work you could not otherwise fund, not as a cheaper substitute for invoice finance.
Funding the middle: uninvoiced WIP and stage payments
Between buying materials and raising the final invoice sits the work in progress itself — the part-built order that has real value but no invoice attached. Most mainstream invoice finance will not touch it, because there is nothing certified to advance against. The fix is to invoice in stages rather than at the end.
If your contracts allow it, negotiate milestone or stage payments — a deposit on order, a payment at material sign-off, another at a defined build stage, the balance on delivery. Each milestone gives you something concrete to bill, and a lender willing to fund applications for payment or progress claims can advance against those. Specialist contract and construction-style funders are comfortable advancing against an application before the work is certified, often releasing a meaningful share within a day or two of the claim going in, where a standard factor would wait for a clean invoice. The advance rate on this kind of contractual, uncertified funding tends to sit below the rate you would get on a completed, undisputed sales invoice, because the funder is carrying the risk that the claim is challenged or the work is rejected.
The lesson for any make-to-order business is to design payment terms into the contract rather than treat them as an afterthought. A build priced with a deposit and two stage payments is fundable in a way that the identical build priced as a single invoice on delivery is not. The commercial terms you agree at quotation stage decide how much of the job you have to fund out of your own pocket.
How the pieces fit together
These structures are not alternatives to each other; they cover different points on the same cycle. Trade and supplier finance fund the purchase of materials and the deposits at the start. Stage payments and WIP-aware funding cover the build in the middle. Invoice finance takes over the moment a deliverable is billed, advancing the bulk of the invoice so the final wait for payment does not strand you again. A long-lead manufacturer running all three has cash available at every step from deposit to settlement, which is the only way to scale an order book without scaling the overdraft alongside it.
A short bridge to cover a single oversized contract can also be done with a cashflow loan, which is faster to arrange and avoids wiring a structured trade facility around one job. That suits a one-off. For a business whose whole model is long, make-to-order builds, the structured facilities pay back the extra cost by letting you say yes to bigger orders without betting the company's cash on each one.
Before you approach a funder
Lenders funding the uninvoiced part of your cycle want evidence the order is real and the customer will pay. Bring the confirmed purchase orders or signed contracts, the supplier quotes and lead times that drive the deposits, a costed view of how much cash the build consumes and when, and an honest read on customer concentration — a long order book resting on one buyer is a different risk to a spread of accounts. The manufacturing sector page shows where this front-of-cycle funding sits against the rest of the stack. Get the contract terms and the order evidence right and a funder can fund work that does not physically exist yet — which is precisely what a long make-to-order book needs.