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Home Cashflow Business Blog The Advanced Manufacturing Fund a major boost to businesses

On May 9, the 2017/18 Federal Budget was announced, with measures in place to support the overall growth of the Australian economy. One major part of that was the introduction of the Advanced Manufacturing Fund - a $100 million investment into training new employees, undertaking research and development programs, and providing facilities to test new products.

While the fund will be a huge boost to many manufacturing businesses around Australia, it should not be the only avenue through which your company boosts its income. Debtor finance is an accessible alternative to provide your manufacturing business with sufficient money to invest, grow, or just maintain market position.

Improving your manufacturing business will take more than the Advanced Manufacturing Fund.Improving your manufacturing business will take more than the Advanced Manufacturing Fund.

Why might the Advanced Manufacturing Fund not greatly impact individual businesses?

The $100 million investment in the manufacturing industry will be a significant boost to the economy overall, but it won't necessarily help every manufacturing firm to improve its operations. Looking at IBISWorld data across four different manufacturing areas in Australia, there are lots of different businesses, and huge revenue - $100 million won't make much of a mark on some of these industries:

  • Soft drink manufacturing: $4 billion in revenue across 78 businesses.
  • Sugar manufacturing: $3 billion in revenue across 26 businesses.
  • Explosives manufacturing: $3 billion in revenue across 44 businesses.
  • Pharmaceuticals manufacturing: $10 billion in revenue across 331 businesses.

The $100 million investment in the manufacturing industry won't necessarily help every manufacturing firm to improve its operations.

"The 2017/18 Budget features important incentives for investment in research and manufacturing," stated Heavy Vehicle Industry Australia CEO Brett Wright to Australasian Transport News on May 10.

"We welcome announcements encouraging business investment including the extension of depreciation incentives."

Investing in manufacturing research and development will help to keep jobs in Australia and the economy growing. However, even an equal split over all of the manufacturers in Australia (not just from the four industries above) would mean a total benefit to each individual business well below $100 million. If you're serious about making leaps and bounds to improve your manufacturing operation, be that by way of increasing your workforce or growing your operational capacity with new machines, you shouldn't solely rely on the Advanced Manufacturing Fund.

What are your other options to improve cashflow in your manufacturing business?

The Advanced Manufacturing Fund will help the manufacturing industry as a whole, but to really grow (or stabilise) your own operation, you need something more specific, more targeted to your financial needs. That's where debtor finance can help.

It takes the average Australian business 14.4 days past the due date to pay invoices.

It takes the average Australian business 14.4 days past the due date to pay invoices, according to Dun and Bradstreet research. That means even for long credit terms (around a month), you can expect to wait an extra two weeks for your debtors to pay what they owe.

Over that time, you'll still have overheads and other costs to keep up with, and you'll be cutting into your working capital if you don't have sufficient cashflow from your customers. Debtor finance means you can have up to 80 per cent of the total of your unpaid invoices paid into your account within 24 hours. If you want to invest in new technology or just want to pay your own bills on time, debtor finance gives you the freedom to do so.

Rather than waiting 14 days past the due date, and as an alternative to waiting for the Advanced Manufacturing Fund to impact your operations, work with Cashflow Finance to expand your manufacturing operation. Become a major player in your field by using the best equipment and hiring the best people. You'll need to invest, though, and that's where we step in.

For more information about debtor finance in the manufacturing industry, contact Cashflow Finance today.

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