Recently I had the pleasure of presenting at the National Manufacturing and Supply Chain Conference and Exhibition, which took place over two days at Dublin’s Citywest Convention Centre. It was an ideal opportunity to catch up with leading figures from across the sector, to discuss how Ireland’s manufacturing businesses can best be supported in the face of challenging domestic and international trading conditions.
In many ways it’s a difficult time for Ireland’s manufacturing sector, which is only now beginning to bounce back from its most protracted downturn in eight years. The recent uptick in orders, output and new jobs within the sector is certainly to be welcomed, but we’ll have to wait and see whether the sector has truly turned a corner. In the past it’s been exports in particular that have suffered, and this is no doubt connected to the weakened UK market as a result of Brexit. This is all the more concerning given the sector’s importance, accounting for around a third of Ireland’s GDP and employing over 250,000 people.
Access to sufficient working capital is vital for manufacturers.Stephen McCarthy, Bibby Financial Services Ireland
On a more positive note, however, confidence among Irish manufacturers regarding future output rose to a six-month high in December and continued into January. This was matched by a focus at the Conference on whether manufacturers should be looking to bolster their Irish business, or instead shift their focus to markets beyond the UK. And, in either case, and how can these activities be funded?
Access to sufficient working capital is vital for manufacturers – especially those with varied and complex production cycles. Manufacturers are also exposed to seasonal fluctuation in orders and payment, but need to be able to run plant, upgrade technology and invest in new materials and inventory all year round.
Having the correct financing structure in place can have a significant impact on a manufacturing business’s capacity for success, providing the liquidity to grow, upgrade machinery or simply help manage day-to-day trading requirements.
This is where Bibby Financial Services can help, by providing the funding solutions that bring stability to the working capital cycle throughout the year. Over a quarter of our clients are manufacturing related, from printing and engineering business through to electrical manufacturers. Invoice finance is a particularly flexible alternative to products offered by the traditional lenders, allowing businesses to quickly raise cash against unpaid invoices. By paying up to 90% of the value of a manufacturer’s invoice within 24 hours, businesses can more easily pay staff, suppliers or take on new orders.
More and more manufacturers are realising the benefits of alternative sources of finance.Stephen McCarthy, Bibby Financial Services Ireland
Similarly, for those businesses that buy from overseas, trade finance can make a huge difference – allowing them to buy, take delivery of, and sell goods before needing to pay for them. Getting access to cash upfront also means firms can take advantage of valuable discounts and build trust with new suppliers quickly and with minimal fuss. This can also be complemented by our business FX service, which allows business to easily make and receive payments across the world.
Too often manufacturers are unaware of how invoice finance can help, or view it as overly expensive, when the reality is very different. However as more and more manufacturers are realising the benefits of alternative sources of finance, they are also becoming more confident in discussing how it helped their business. Chameleon Art Products, who produce a range of pens, markers and other art tools, have successfully used financial supports to grow their business and relieve the pressure of chasing payments.
At the same time, alternative providers understand the specific challenges facing smaller businesses, and are well placed to offer best practice advice and guidance on a range of issues from working with suppliers through to international trade. As we move into a new economic environment, one in which the UK has left the EU and Ireland’s SMEs are re-evaluating their export options, this type of guidance may prove make or break for many of Ireland’s manufacturers.