Oregon’s manufacturing industry continues to evolve, prompting companies to grow, innovate, and remain competitive in an increasingly complex economic landscape. Between rising material costs, extended payment cycles, and ongoing investments in equipment and technology, maintaining a healthy cash flow is critical for long-term success. One tool that can provide valuable stability and flexibility is trade credit.
As a long-time partner to manufacturers across the Pacific Northwest, EPB&B understands the financial pressures facing production facilities, fabricators, distributors, and specialized manufacturers throughout Oregon.
What Is Trade Credit?
Trade credit is an agreement between a buyer and a supplier that allows materials or services to be purchased today, with payment due in 30, 60, or 90 days. For Oregon manufacturers, this means gaining access to raw materials and components, producing finished goods, and selling them before payment deadlines come due.
This built-in delay helps reduce cash flow stress without requiring additional loans or financing.
Trade credit allows manufacturers to:
- Manage working capital more effectively
- Strengthen supplier relationships
- Maintain production even when cash is tight
- Invest in equipment, staffing, and growth opportunities
Here’s how trade credit plays a strategic role in Oregon’s manufacturing landscape.
1. Improving Cash Flow Management
Cash flow is the foundation of any successful manufacturing operation. With trade credit, manufacturers can better match outgoing payments with incoming revenue.
For example, if a supplier offers 60-day terms and customers typically pay within 30 days, that creates a 30-day liquidity buffer that can be used to:
- Cover payroll and utilities
- Manage overhead
- Invest in new capabilities.
Key Benefit: Trade credit helps maintain financial stability by avoiding reliance on short-term loans or costly overdrafts.
2. Supporting Production and Supply Chain Continuity
Access to raw materials must remain consistent to avoid production delays. When revenue timing becomes unpredictable, manufacturers risk bottlenecks that can halt operations.
Trade credit reduces that risk by allowing purchases to continue even during tight cash windows, helping Oregon manufacturers stay on schedule—especially during seasonal fluctuations or supply chain disruptions.
Key Benefit: Manufacturers can maintain smooth production, ensuring reliable delivery timelines for customers.
3. Strengthening Supplier Relationships
When suppliers extend trade credit, they’re demonstrating trust. Oregon manufacturers that consistently pay on time build strong, long-term partnerships that can lead to:
- Better pricing
- Priority access during shortages
- Extended payment terms
- Improved negotiation leverage
In today’s competitive manufacturing environment, especially when materials are scarce, these advantages are crucial.
Key Benefit: Being a reliable trade credit partner enhances reputation and manufacturing resilience.
4. Enabling Growth and Expansion
When cash isn’t tied up in immediate payments, manufacturers can reinvest in areas that drive business forward, including:
- Automation and digital tools
- Facility expansion
- Product development
- Workforce training
Trade credit also contributes to a favorable financial profile, supporting eligibility for future loans, grants, or investment opportunities aligned with Oregon’s manufacturing incentives.
Key Benefit: Trade credit frees capital for strategic growth and innovation.
5. Reducing Reliance on External Borrowing
Traditional lending typically requires time and often incurs interest; however, it also functions as interest-free short-term financing when payments are made within the agreed-upon terms.
For Oregon manufacturers navigating fluctuating material costs or tight delivery deadlines, this flexibility can make a significant difference.
Key Benefit: Less dependence on bank lending, lower borrowing costs, and fewer administrative hurdles.
In a state where manufacturing plays a central role, encompassing everything from wood products and metals to aerospace and high-tech components, cash flow challenges are a constant concern. Trade credit offers a practical and cost-effective means of managing working capital, sustaining production, fostering stronger supplier relationships, and driving sustainable growth.
At EPB&B Insurance, our team understands the unique financial pressures that Oregon manufacturers face. Through proactive risk management, business insurance solutions, and strategic guidance, we help protect the operations, employees, and future of our state’s manufacturing community.