Factory order books are at their strongest in more than three years. That is the headline from the CBI's Industrial Trends Survey of 234 manufacturers, published on 22 September. For a small manufacturer, more orders bring a practical question: how do you pay for the work before the customer pays you?
01What the CBI found about factory order books
The CBI measures order books as a balance. It takes the share of firms reporting orders above normal and subtracts the share reporting below normal.
In September that balance was -9%, up from -25% in August. More firms still report orders below normal, but far fewer than a month ago. According to the CBI, it is the best reading since July 2023.
Output fell only slightly in the three months to September, with a balance of -4%. Firms expect a similar small fall in the three months to December.
Two other findings matter for cash. Expected price rises eased, from +22% to +12%. Stocks of finished goods fell to their lowest level since April 2024.
The CBI is cautious. Its senior economist, Cameron Martin, said: "it is still too early to call this a sustained recovery." Manufacturers still face high supply chain, energy and employment costs.
02The cash gap inside a bigger order book
Why does good news need planning?
Because a new order costs money long before it earns any. You buy materials, pay wages and run the machines first. The invoice goes out when the job is done, and payment can take weeks after that.
With stock levels low, many firms will need to buy in or build up before they can deliver. The bigger the order, the wider that gap.
03Three ways to fund the work
Each part of the gap has its own kind of finance.
- Materials and wages: An overdraft or a short working capital loan covers the weeks before you invoice.
- Waiting to be paid: Invoice finance releases most of an invoice's value once it is raised.
- More capacity: Asset finance spreads the cost of a new machine over its working life.
It pays to arrange this before you accept the order, not after the first supplier bill arrives. Our guide to working capital for small manufacturers covers the checks to run on a bigger order.
If the orders mean a bigger step, such as new premises or a second shift, talk to us about growth finance. We can look at the deal across a wider range of lenders.
