Can I get working capital to bridge long OEM or Tier payment terms?

Short answer

Yes — UK suppliers to OEMs and Tier 1–3 manufacturers can access working capital solutions designed to bridge 30–120+ day payment terms. Common options include invoice finance, supply chain finance, trade and purchase order finance, revolving credit, and asset-based lending. Best Business Loans does not lend directly, but we connect established UK businesses with suitable lenders and brokers who understand complex supply chains.

Why long OEM and Tier payment terms create cash flow pressure

What “bridging payment terms” really means

When you supply to an OEM or Tier customer, you often ship now and get paid much later. While you wait, you still need to buy materials, pay staff, and fund production and logistics. Bridging finance releases cash against confirmed orders or invoices so you can operate without waiting for cash to arrive.

Typical terms in UK manufacturing and engineering

Net 60, 90, or 120-day terms are common where goods require inspection, sign-off, or warranty obligations. Payment timings can stretch further with disputes, credit notes, or global shared service centres. This delay can freeze a large chunk of your working capital just when you need it.

Common scenarios that benefit from bridging

• Engineering firms supplying sub-assemblies to Tier 1s with 90-day terms.
• Fabricators shipping bespoke components with staged acceptance milestones.
• Electronics suppliers importing parts on 30-day supplier terms but waiting 90+ days for OEM receivables.

These gaps are normal, not a sign of weakness. Lenders assess them every day across UK supply chains.

Why cash flow solutions are tailored to OEM/Tier supply

Funding providers look closely at buyer quality, contracts, and invoice verification. Strong off-takers such as household-name OEMs are typically viewed favourably. Facilities are structured around your order-to-cash cycle, not just a generic loan timeline.

Compliance, transparency, and fairness

Any finance must be presented in a way that is clear, fair and not misleading. We help you compare options and understand costs, risks, and obligations before you proceed. All funding decisions are made by authorised lenders or brokers, and terms will depend on your circumstances and status.

Funding routes that bridge OEM and Tier payment terms

Invoice finance: factoring versus invoice discounting

Invoice finance advances a percentage of your invoice value upfront, with the balance (minus fees) paid when your customer settles. Factoring includes credit control and customer contact; invoice discounting keeps collections with you for confidentiality. Advance rates typically range from 70% to 95% depending on debtor quality, sector, and dilution risk.

Costs and speed you can expect

Costs usually include a service fee (often 0.5%–3% of invoiced turnover) and a discount rate (base rate plus a margin). Setup can complete in 1–3 weeks once due diligence is done and debenture or assignment rights are agreed. Some selective invoice finance providers can fund individual invoices within days after approval.

Supply chain finance (reverse factoring)

If your OEM offers a supply chain finance programme, you can opt to be paid earlier by a bank at a small discount. The bank relies on the OEM’s credit profile, which can reduce your cost of funds. This is often the lowest cost “bridging” route when it’s available.

Trade and purchase order (PO) finance

If your cash gap occurs pre-invoice, trade or PO finance can fund deposits, raw materials, and supplier payments. Lenders look for verifiable purchase orders, reliable end-buyers, and clear logistics and inspection steps. This can dovetail into invoice finance once the invoice is raised.

Stock finance and asset-based lending (ABL)

Stock finance releases cash against eligible inventory, often alongside receivables finance. ABL can combine receivables, stock, and sometimes plant and machinery into a single revolving facility. This can suit larger manufacturers with seasonal builds or long production cycles.

Revolving credit and working capital loans

Some businesses prefer a revolving credit facility or term loan for simplicity. These work best when your order book is predictable and margins support repayments. Government-backed options like the British Business Bank’s Growth Guarantee Scheme may be available via participating lenders.

Eligibility and how to strengthen your case

What lenders typically look for

• Established UK trading history, usually 12+ months and B2B invoices.
• Creditworthy OEM/Tier customers and manageable concentration risk.
• Clear contracts, acceptance procedures, and minimal dispute risk.
• Robust invoicing, delivery evidence, and quality documentation.

Financial statements that show healthy gross margins and a viable cash cycle help. Lenders will also consider existing security, bank debentures, and any intercreditor arrangements needed.

Documents that speed up approvals

• Customer list with credit limits and historic payment performance.
• Sample master supply agreements and standard terms and conditions.
• Recent aged debtor and creditor reports, plus top debtor analysis.
• Proof of delivery, inspection protocols, and acceptance criteria.
• Any product warranty terms and rebate or contra mechanisms.

Clarity on set-off rights, liquidated damages, or penalty clauses is important. Lenders will factor these into eligibility and advance rates.

Ways to improve eligibility and pricing

• Seek acknowledgement of assignment from your OEM customers where possible.
• Limit contra and rebate exposure, or ring-fence it contractually.
• Consider trade credit insurance to reduce debtor risk and improve advances.
• Align your ERP and invoicing to minimise disputes and credit notes.

Where one customer dominates your sales, address concentration with limits, insurance, or diversified growth. Small operational tweaks often translate into better funding terms.

How long to funding?

Indicative heads of terms can arrive within days for straightforward cases. Full onboarding varies by product: 1–3 weeks for invoice finance, 2–4+ weeks for ABL or trade finance. Complex intercreditor or international supply chains can take longer, but good preparation reduces timelines.

Costs, risks, and practical considerations

Understanding price components

Expect a combination of service or facility fees, a discount or interest margin, and sometimes arrangement and audit fees. With ABL, each collateral class may have its own pricing and advance rate. Always model the “effective cost per day” against your average debtor days to assess value.

Contract and legal points to check

• Assignment: does your OEM contract allow assignment of receivables or require consent?
• Set-off: are there rebates, tooling charges, or warranty claims that can dilute invoices?
• Pay-when-paid and milestone acceptance: will staged sign-offs delay eligibility?
• Exclusions: are service or installation elements fundable, or goods only?

Your lender will flag any ineligible items and concentration limits during due diligence. Clear contract language helps maximise what can be funded.

Security and existing bank relationships

Invoice finance usually requires a fixed and floating charge or at least a charge over book debts. If your bank already has a debenture, an intercreditor deed will likely be needed. Open communication with your bank can smooth the process and avoid surprises.

Implementation and everyday operations

Modern platforms integrate with common UK accounting systems for easy reconciliations. Expect periodic audits, concentration reviews, and covenant checks if applicable. Good housekeeping on PODs, GRNs, and credit notes keeps funding fluid.

Benefits and potential downsides

• Benefits: faster cash conversion, scalable with sales, often cheaper than equity.
• Downsides: fees, operational discipline required, and potential notice-of-assignment visibility.

If confidentiality is crucial, consider invoice discounting or selective receivables funding. Your provider will explain pros and cons specific to your sector and buyers.

How Best Business Loans helps you move quickly

Smart matching to lenders and brokers who understand OEM supply chains

We use AI-driven matching to connect you with providers active in manufacturing, engineering, and complex B2B trade. Tell us your cash gap, customers, and contract setup, and we point you to relevant options. You save time approaching multiple financiers, and you stay in control throughout.

What you can expect after a Quick Quote

• No-obligation introductions to suitable providers for your needs.
• Clear outlines of costs, structures, and information requirements.
• Fast feedback on eligibility, typical advance rates, and timelines.

We don’t supply loans, and we don’t promise the lowest rate every time. Our goal is to help you find reliable, relevant partners who can genuinely help.

Who this is best for

Established UK SMEs and mid-market firms supplying components, assemblies, or services to OEMs and Tier buyers. Businesses with predictable invoicing and verifiable deliveries or milestone sign-offs. Firms operating in engineering-heavy sectors can also explore our dedicated guidance on engineering business loans.

Quick steps to get started

1. Complete the Quick Quote form with your funding need and sector details.
2. Share basic financials and top customer information when requested.
3. Review matched options, compare terms, and select your preferred route.

It’s fast, secure, and free to submit an enquiry. You can request an eligibility check or decision-in-principle to move faster.

FAQs

Can I fund just one large OEM invoice?
Yes, selective invoice finance allows single-invoice funding with eligible buyers. Costs can be higher per invoice than a full facility, but it’s flexible.

Will my OEM find out?
Confidential invoice discounting can minimise customer awareness. Some contracts still require notice or consent to assign receivables.

How much can I get upfront?
Typical advances range from 70% to 95% depending on buyer quality, concentration, and any dilution risk. Trade or PO finance advance rates depend on the stage of the supply chain and security.

Is this available if I export to EU or US OEMs?
Yes, many providers support export receivables and cross-border trade. You may need additional documentation, credit insurance, or currency arrangements.

What if I already have a bank debenture?
An intercreditor agreement can allow a specialist receivables funder to sit alongside your bank. Your adviser or broker will coordinate this as part of onboarding.

Important information and compliance

Best Business Loans is an independent introducer, not a lender, and does not provide financial advice. Any figures, advance rates, or timelines are illustrative and subject to status, eligibility, and provider terms. Business finance is for business purposes only; fees and charges may apply; late or missed repayments can affect your business and its credit profile.

All promotions aim to be clear, fair and not misleading, aligning with FCA and ASA standards. When you proceed, your agreement will be with an authorised lender or regulated broker where required, and their terms will govern. Always read documents carefully and seek professional advice if unsure.

Key takeaways

• Yes — there are proven ways to bridge 60–120+ day OEM and Tier payment terms.
• Invoice finance, reverse factoring, trade/PO finance, and ABL are the core tools.
• Strong buyer quality, clean documentation, and clear contracts improve terms and speed.
• Best Business Loans matches you with suitable UK providers — quickly and without obligation.

Ready to explore options? Get your free Quick Quote for an eligibility check or decision-in-principle today.