LS Manufacturing targets £4m after £400k invoice-finance growth bridge

British clothing producer LS Manufacturing is on course to increase annual turnover from £3m to £4m after using a £400,000 invoice-finance facility from Time Finance to manage the cash-flow demands created by a growing order book.

The Wolverhampton-based company produces premium garments for established British brands and an expanding export customer base. Its growth created a common problem for manufacturers: substantial labour and production costs had to be met before customers settled the resulting invoices.

Weekly payroll obligations placed particular pressure on the business when large contracts generated revenue on monthly or quarterly payment cycles. Time Finance structured the facility around LS Manufacturing’s sales ledger, allowing the company to draw funding against unpaid invoices when cash was required.

Daljit Mehat, managing director of LS Manufacturing, said the company had been overtrading because cash flow could not keep pace with demand. He said previous high-street lenders had lacked the flexibility required by the business and had attempted to impose restrictive management arrangements.

“Switching our facility to Time Finance changed everything,” Mehat said. “The flexibility to withdraw funds exactly when we needed them gave us total stability.”

The facility also included support when an American customer entered administration. Time Finance recovered £10,000 from an outstanding debt of £11,000, limiting the loss suffered by the manufacturer.

LS Manufacturing has now reached a point where it no longer requires the facility. The company plans to expand its domestic and export order books, protect specialist British manufacturing skills and potentially move from its longstanding mill premises into a more modern production facility.

Phil Chesham, managing director of Invoice Finance at Time Finance, said the company needed a financial partner that understood the operating rhythm of manufacturing, particularly the conflict between frequent payroll commitments and slower customer-payment cycles.

The case demonstrates that invoice finance does not necessarily have to become a permanent part of a company’s capital structure. A properly matched facility can provide temporary headroom during a period of overtrading and then reduce naturally once revenue, retained cash and customer payments become sufficient to support operations.

Source: timefinance.com