What does this guide cover?

The same physical goods are worth nothing, then a quarter of a million, then half a million, depending only on which shelf they are standing on.

Which funding products does this apply to?

Working Capital, Business Line of Credit, Invoice Financing, Asset-Based Lending. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.

Is this specific to manufacturing?

It is written around how a manufacturing business actually generates and collects cash, which is what makes its funding problem different. The mechanics transfer; the arithmetic may not.

The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.

How do I know a figure here is right?

Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.

Are the examples real deals?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.

Why do you never say what a typical rate is?

Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.

Is this financial or legal advice?

No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.

Can I reuse this content?

Quote a paragraph with a link back. Do not republish whole articles.

Why work in progress is excluded from a borrowing base

A manufacturer with 410,000 of work in progress on the floor gets a borrowing base certificate back with a zero next to it, and reasonably asks what happened to the money. Nothing happened to it. The goods are worth what they are worth. The question the lender is answering is different: what would this be worth to somebody who is not you, on a Tuesday, in a hurry.

Illustrative only —a manufacturer with raw materials 320,000, work in progress 410,000, finished goods 180,000 and receivables 540,000, of which 480,000 pass the eligibility tests. The facility advances 85 per cent on eligible receivables and 50 per cent on eligible inventory, with the inventory line capped at the receivables line.

Receivables availability: 480,000 at 85 per cent is 408,000
Inventory availability: 50 per cent of raw plus finished, so 50 per cent of 500,000 is 250,000
Work in progress: zero
Total availability: 658,000

Had work in progress counted at the same 50 per cent, it would have added 205,000 — more than half again on the inventory line.

The three reasons it is excluded

It cannot be sold as it stands.A half-machined casting, a partially assembled panel, a batch of parts waiting on heat treat: none of these has a buyer. An appraiser producing a net orderly liquidation value assigns raw materials their scrap or resale value and finished goods a discount to invoice. Work in progress gets raw-material value at best, and often less, because recovering the raw material means undoing the labour you already paid for.

It cannot be counted.Raw materials and finished goods sit in locations with counts. Work in progress is distributed across machines, benches and staging areas in a state that changes hourly. A field exam that can verify raw and finished within an hour will spend a day failing to verify work in progress, and the examiner's report will say so.

Its cost is mostly labour and overhead.The value on your books includes absorbed labour and factory overhead. A lender advancing against that is advancing against your own cost accounting, which is an internal estimate, not an observable market. Even generous facilities that include work in progress do so at cost excluding labour, which is to say at raw-material value under a different name.

What actually converts it

The same 410,000 moves through three states, and the availability follows.

As work in progress: zero availability.
Completed into finished goods, at a cost carrying value of 410,000: 50 per cent gives 205,000.
Shipped and invoiced, at an illustrative 1.45 times cost, producing a 594,500 invoice: 85 per cent of that is 505,325.

Nothing about the goods changed except where they stood and whether an invoice existed. That is the single most useful thing to know about an asset-based facility: your availability is a function of throughput, not of inventory. Every day a job sits at 80 per cent complete is a day the facility is lending you nothing against it.

This reframes the shop-floor conversation. A cell that finishes jobs three days faster is not just a productivity improvement; on the numbers above, pulling 410,000 through to invoice three days earlier is worth three days of 505,325 of availability, every cycle, permanently.

The exceptions worth asking about

Some facilities will include work in progress, under conditions. Ask specifically about these.

A work-in-progress sublimit at a low advance rate.Perhaps 20 to 30 per cent of cost, capped at a dollar figure, and available only where the appraiser has confirmed the goods are standard product rather than bespoke. Bespoke work with one possible buyer is worth nothing on liquidation no matter how complete it is.

Progress billing.If your contracts allow billing at milestones, work in progress becomes a receivable before the goods are finished. This is the single most effective structural change available to most job-shop manufacturers, and it is a sales negotiation rather than a financing one.

Purchase order financing against the confirmed order behind the work.This sits alongside, rather than inside, the borrowing base: the funder pays your supplier directly and is repaid from the invoice. It works best on finished-goods resale and reasonably well on assembly, and badly on long-cycle machining where the conversion period is measured in months. The fit is set out in purchase order financing for manufacturers.

Customer deposits.Not financing at all, but the cheapest money available. A 30 per cent deposit on a job funds the raw material and part of the labour, and it removes the amount from what you need a facility to carry.

The eligibility tests that quietly shrink the rest

Work in progress is the obvious exclusion. These are the ones that catch people after signing.

Slow-moving and obsolete stock. Inventory with no usage in a defined period drops out. Ask what the period is: 180 days and 365 days produce very different numbers in a business with long-tail spares.
Consigned or customer-owned material. Material supplied by the customer for you to process is not yours and never counts, even though it is in your building and on your floor.
Inventory at third-party locations. Outside processors, platers, coaters and finishers hold your goods. Without a bailee letter acknowledging the lender's interest, that inventory is ineligible. Every manufacturer that outsources heat treat has money sitting in this category.
In-transit goods. Usually excluded unless there is a negotiable document of title and specific agreement.
Landlord and warehouse access. No landlord waiver, no inventory availability at that location, in most facilities.

What to do with this

Run your own certificate before the lender does. Take last month's inventory report, strip out work in progress, strip out material at outside processors, strip out anything with no movement in the eligibility window, and apply the advance rates in your term sheet. The number you get is your real facility size. If it is materially below what you were quoted, the quote was based on total inventory and the conversation needs to happen now rather than at the first monthly certificate.

Then pick the lever. In most job shops the order of impact is: progress billing first, because it converts work in progress into receivables at the highest advance rate; bailee letters second, because they are free and recover real dollars; cycle-time reduction third; and a work-in-progress sublimit last, because it is the smallest and most expensive of the four.

Ask your prospective lender for a completed sample borrowing base certificate using your own last-month figures before you sign a commitment, and ask for the appraiser's inventory categories in writing. A facility whose headline size you can only reach on a month you will never have is not the facility you agreed to.