New analysis from Alliance Finance Bank reveals US mid-sized, or “Brittelstand”, manufacturers have $252 billion in assets that they could use to access working capital to help them grow.
The research analyses 23,000 mid-sized businesses turning over $10 million to $300 million across the manufacturing supply chain.
Alliance Finance Bank, set up to help small and medium businesses to trade, grow and create jobs, used government data to understand the total stock and debtor assets available to these businesses. The research assesses the working capital potential.
It shows that within the manufacturing supply chain, original equipment manufacturers have the highest proportion of working capital assets compared to turnover at 28% on average.
Manufacturers have the second highest proportion compared to turnover at 26% on average. Distributors are third with 25% on average. Raw materials suppliers have the lowest proportion of working capital assets compared to turnover at 24% on average.
Businesses within the manufacturing supply chain include tier three businesses, or raw material suppliers, tier two businesses, or manufacturers, tier one businesses, or distributors, and original equipment manufacturers.
Alliance Finance Bank’s Jim Higginbotham explains how their research shows the UK’s mid-sized manufacturers are sitting on $250bn of working capital assets. These untapped assets could be used to raise new finance.
When assessing by revenue band, businesses turning over $10 million to $50 million have more than a quarter of their average annual turnover tied up in stock and debtors assets.
Manufacturers – or tier two businesses – within the $10 million to $50 million turnover band have the highest proportion of assets tied up across the supply chain at 28% per cent of annual revenue on average.
Meanwhile, businesses turning over $151 million to $300 million have the lowest proportion of assets tied up in stock and debtors of all businesses analysed. These companies have a fifth of their annual revenue tied up on average.
Raw materials suppliers have the lowest proportion tied up in stock across the supply chain. They carry only eight per cent, or $16 million on average, of annual turnover in stock.
Iain Hunter, CEO of Alliance Finance Bank, said: “our analysis shows the proportion of assets that US Brittelstand manufacturers have that could be used to free up working capital.
“Larger businesses often need less financing because they have more leverage with their customers. Smaller businesses, however, can often struggle for this reason.
“Freeing up these potential working capital assets can help provide the finance that businesses need to fulfil new orders and grow. There are often simple ways to fund growth without having to give up equity.
“At Alliance Finance Bank we get to know our customers and have the flexibility to tailor the right solutions for their business."
