what are manufacturers’ biggest liabilities?
The biggest challenge facing manufacturers in such an unstable economy is the inherent risk of having a long lead time. Because many manufacturers produce most of their goods overseas, many changes can occur during the six-to-eight-week production cycle, the most important of which is if the credit facility that has been given by the factor will remain intact. It has always been standard practice that the factors could withdraw an approval at any time, and the risk would revert to the client as long as said merchandise has not been shipped. The occurrence of this happening historically has remained minor. However, because of the current volatility, the probability is relatively high that sudden changes in the end users’ status will force the factor to pull the approval. A second problem for the manufacturers is that the factor will not grant approval within the time frame that the vendor requires. For instance, if the manufacturer requires an approval today, in order to begin productio
