About financing measures for the manufacturing industry. invoice Adjust material and outsourcing costs by card payment

"Orders are increasing, but payment is still a long way off, and before that, there will be payment days of raw material purchase and outsourcing costs."
In the manufacturing industry, there are many situations where such an increase in orders leads to a temporary increase in the financial burden.

To make a product, we first procure raw materials, parts, and materials, outsource processing and assembly to an external partner company as necessary, and after completion, we proceed to sales recording and payment after delivery, inspection, and payment. In other words, while expenditures on procurement and production go first, sales proceeds tend to come in later.

One way to address this funding gap is "invoice card payments," which switch invoice designated by Bank transfer to card payment. Among them, the "Invoice Card Pay byGMO" provided by GMO Payment Gateway (hereinafter referred to as GMO-PG) is a service that allows you to pay invoice specified by Bank transfer with your card, making it easier to adjust the timing of the payment up to about 60 days later. In this article, we will explain how invoice card payment can be useful in the manufacturing industry, including when it is suitable for it and what to keep in mind.

The factors that make it difficult for the manufacturing industry to make money are the length of "procurement→ production→ delivery→ and payment"

It's not just a lot of payment that makes it difficult for manufacturing to make money.
The process from material procurement to sales receipt is long, and it is a big burden to have cash out first during that time.

In particular, cash on hand tends to become thinner in the following situations.

• Before mass production, secure raw materials and parts together
• Increase outsourcing of processing and assembly to external partners to meet delivery deadlines
• Accumulate safety stock in anticipation of longer lead times
• Due to acceptance conditions, the payment will not be made for a while after delivery.
• Raw material costs and outsourcing costs overlap in the same month
  
  

For example, while sales are expected in the month when a large project is received, material costs and outsourcing costs to turn the project around are incurred first. In addition, in the manufacturing industry, there is also a difficulty in the relationship with business partners, where delays in payment to suppliers and partner companies can easily lead to an impact on procurement and production.

Therefore, in the cash flow of the manufacturing industry, it is essential to manage thetiming of cash inflows and outflows, as well as "whether or not there will be a profit".

Invoice Card Pay byGMO is one of the options to adjust the timing of the payment

An easy way to consider a countermeasure to such a discrepancy is "Invoice Card Pay byGMO".

The service allows you to payment Bank transfer invoice with a card. Since the payment is deposited in Bank transfer, it is easier for the company to delay the timing of cash-out without changing the receiving method on the business partner's side. Registration is free, and there are no upfront or monthly fees. The only cost required is the fee at the time of use.

Image of how it works

1. Check the invoice received from raw material manufacturers and suppliers
2. invoice Register your information and make a payment request with your card
3. The payment recipient is made in Bank transfer (in the name of the company that uses invoice card payment)
4. Actual spending from your own account occurs on the date of the card company's debit.
   
   

This flow makes it easier to alleviate the discrepancy between "payment of material costs and outsourcing costs come first, and sales receipts come later."​
In addition, since the transfer name can be set in your own name, it is easy to use while considering the relationship with suppliers and partner companies, which is also a good point in the manufacturing industry.

Note that the maximum number of days you can extend your payment is about 60 days, but it's not always the same. Card payment Depends on the application date and the closing and withdrawal dates of the card you use. There is a review prescribed by GMO-PG for use, and depending on the results of the review, it may not be available.

Three situations where invoice card payment is suitable in the manufacturing industry

1. When material costs increase first due to large-scale orders

In the manufacturing industry, it may be necessary to procure raw materials and parts in advance when an order is decided.
In a situation where sales are visible but payment is still ahead, it is easier to reduce the burden of cash flow if you can bring payment of the material cost closer to the sales receipt.

2. When outsourcing processing costs are concentrated and there is time to inspect and receive payment.

In a business type where processing and assembly are often outsourced to partner companies, it is easy to payment the outsourcing cost to take precedence.
In particular, in transactions that are billed and paid after the completion of the acceptance inspection, there is a tendency to occur during a period when only the outsourcing cost comes first, so there is a lot of room to adjust the timing of the payment.

3. When you want to save your bank loan line for capital investment

In the manufacturing industry, there are situations where a large amount of funds are required in the future, such as machine introduction and renewal investment.
Therefore, it is compatible with the idea that variable costs such as daily material costs and outsourcing costs should be adjusted by other means, andbank borrowings should be used for long-term investment.

4 points to check before using

1. Can you absorb the 3.0% commission in gross profit?

The fee for using Invoice Card Pay byGMO is 3.0% of the payment amount and a minimum of 1,500 yen.
Therefore, it is necessary not only to "push back the payment date", but also to judge whether the cost is acceptable in the gross profit of the project and the production plan.

For example, there are months when the value of being able to meet deadlines and complete a project is great, even if payment of material costs temporarily overlap, while there are months when profit margins are low and it is difficult to make a profit every time.
In the manufacturing industry, it is easier to judge if you think of it as an option for the month when cash flow is likely to be temporarily blocked rather than a regular method.

2. What is the payment content that is eligible?

We support a wide range of payment, including outsourcing costs, purchasing costs, advertising costs, rent, and taxes, butsome exclusions are available. Therefore, if you want to use it for material costs or outsourcing costs, it is safe to check in advance.

3. Availability depends on the card limit

The maximum usage limit of the service is basicallywithin the usage limit of the card you have.
At the end of the month, other payment overlap, you need to look ahead to how much space you have that can be used for material and outsourcing costs.

4. Check available invoice and card terms

The assumption is that it is a invoice of Bank transfer and is a business-to-business payment.
In addition, the card brands and conditions that can be used vary depending on the application window, so it is safe to check the latest conditions before proceeding.

Cases that are not suitable

On the other hand, it may be better to prioritize alternative countermeasures in the following cases:

If you want to use it to fill a chronic deficit

While this service is easy to use as a means of adjusting short-term funding gaps, it is not suitable for compensating for fundamental deficit structures. Since there is a fee, if you use it regularly for a purpose that supports an unprofitable state for a long time, the burden may increase.

If you want to secure long-term funds for more than half a year

The adjustment range for payment is up to about 60 days, and it is not a mechanism aimed at securing long-term funding.
For capital investment and securing long-term working capital, alternative methods such as bank loans are more suitable.

If you want to permanently defer the payment of your monthly fixed expenses

Even if you are dealing with outsourcing and purchasing costs, it is easy to overdo the operation in terms of card limits and fee burdens if you continue to shift the monthly payment.
It would be easier to use it as a response to temporary busy seasons and increased orders.

Frequently Asked Questions (FAQs)

Q. Can you tell your business partner that you are using invoice card payment?

The payment recipient is credited with Bank transfer, and the transfer name can be set to your company name. payment You do not need to notify us of your use of the Service in advance.

Q. Can I use any invoice?

Business transactions payment only. Not all payment are eligible, so you need to check before using them.

Q. Who pays the fees for Credit card payment?

The payment using the service will bear the burden. The fee for use is 3.0% of the payment amount, with a minimum of 1,500 yen. (The transfer fee is included in this fee)

Q. Is there a usage limit?

Basically, you will use it within the usage limit of your card. When using it for payment of material costs and outsourcing costs, it is important to manage the frame along with other expenses.

Summary: Prepare the usage environment as one of the options

In the cash flow of the manufacturing industry, it is necessary to look not only at "whether there are orders" but also "how the timing of procurement, production, delivery, and payment is off".
In particular, in months when material costs and outsourcing costs precede, even if the project is profitable, only cash on hand may be temporarily tight.

Invoice Card Pay byGMO is an option to switch the invoice specified by Bank transfer to card payment and adjust the timing of the payment in such situations. Registration is free, and there are no upfront or monthly fees. On the other hand, the maximum number of days of about 60 days is not fixed, and it is also necessary to check the prescribed screening, eligible expenses, and card conditions.

Loans for capital investment, invoice card payments for discrepancies in daily material costs and outsourcing costs, and so on.Be prepared to use different means of financingThis leads to stable production activities.
Before busy seasons or large-scale projects, it is easier to make a decision when necessary.

Features of "Invoice Card Pay byGMO"

• Extend payment by up to 60 days to improve cash flow

・The fee is a flat rate of 3.0% (minimum fee of 1,500 yen)

・Completed online with only a simple examination, available on the same day

・You can set the transfer holder as your company name and it will not be known to your business partners.

・Reliability of GMO payment gateways for listed companies

From a situation where you have a job but are pressed for cash, you can go to management with plenty of cash on hand and seize the next growth opportunity. To help with this, there is an option called BPSP (invoice Card Payment).

Why not start by registering and having it as a "talisman" in case of emergency?