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Creating a steady flow of funds may help you build your business.

Many manufacturers find it difficult to even out payments for operating expenses and supplies, since cash flow in the plant isn't steady all year long. There are ways to level out the peaks and valleys, though.

First, manufacturers tend to work with the same suppliers from year to year. You might think that the terms you're used to seeing are the only ones offered, but that's not the case. You can negotiate the payment terms for your supplies. You may buy a certain part in January, but you expect to finish production in late September. Talk to your supplier about extending the term to 60, 90 or even 120 days, so that you're paying for parts even a few months closer to the time you'll sell the finished product.

Conversely, you may be able to take advantage of price discounts for paying for supplies at the time of purchase. In those cases, you have to weigh the value of the discount versus the interest on the line of credit.

The important thing is to look for points in the year when you have good cash flow. Arrange for payments to come due at those times, instead of when you're on the low side.

You may also want to look at alternative ways to make and receive payments, such as online banking. After all, hoping checks will clear when you need them to and sending one of your people off to the bank every day don't make your life easier.

A business credit card sometimes helps manufacturers through periods of low cash flow, and there are new cards that give you more control over the spending in your operation. You can sign employees up for them, with their names on the cards, just like you're used to. Then you can set the kinds of charges each employee can make. So if you have vehicles on the road and you want the drivers to be able to buy fuel, but not snacks, you can make that call. Then, when you get the report, you'll see each employee's expenses, by employee name and category of expense, with the total for all of the cards. It gives you better control and reporting--and it's good from a liability standpoint.

To keep tabs on recurring expenses, you might take a look at automated clearinghouse, or ACH, capabilities from PNC. ACH lets you schedule payments in certain amounts, to be made at certain times--even on a recurring basis, like utility bills. They can take the place of payments you'd usually make by check. So you know when the money is leaving your account, instead of waiting for a check to clear. In fact, many suppliers prefer automated payments like these. In addition, you can receive ACH payments, and the receipt of these funds can be tracked using online banking.

Finally, remote deposit systems may help you get money into your account more quickly--so it's there when you need to pay it out. And by scanning the checks you receive into your computer instead of driving them to the bank, you free up your employees. For manufacturers who may get several checks in a short period of time, that can be a real help.

Call your PNC Business Banker to discuss your manufacturing operation, business strategies and financial needs, and the PNC cash flow solutions that may help you accomplish your goals.


The article you read was prepared for general information purposes by McMurry. These articles are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. PNC urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.These articles may provide reference to Internet sites as a convenience to our readers. While PNC endeavors to provide resources that are reputable and safe, we cannot be held responsible for the information, products, or services obtained on such sites and will not be liable for any damages arising from your access to such sites. The content, accuracy, opinions expressed, and links provided by these resources are not investigated, verified, monitored or endorsed by PNC.