The Factory Is Smart. The Balance Sheet Isn't.
There's a manufacturer outside of Dallas doing $22 million a year. CNC machines on the floor that cost more than most people's houses. Tolerances measured in thousandths of an inch. The operation is precise. The business behind it isn't.
The purchasing manager orders materials based on gut feel and a spreadsheet she inherited from the last guy. The CFO tracks receivables in QuickBooks and finds out a customer is 90 days late when he happens to check. A quarter of the inventory in the warehouse hasn't moved in over a year. Nobody knows exactly how much it's worth because the system that tracks it doesn't talk to the system that prices it.
This company is profitable, but it doesn’t actually know where its cash is. That’s not unusual.
Manufacturing’s hidden cash crisis
Manufacturing doesn't look like it has a cash flow problem. That's exactly why it does.
Here's what it looks like. The average manufacturer extends net-60 to net-90 terms to their customers while paying their own suppliers in 30. That's a 30 to 60 day gap where they're financing their customer's operations with their own cash. Mid-market manufacturers typically wait 45 to 60 days to get paid after delivering the product. Meanwhile, 20% to 30% of inventory sits idle in warehouses, tying up cash in material that isn't earning anything and may never sell.
Add it up, and the typical manufacturer has millions locked in receivables they can't collect fast enough, millions more locked in inventory they can't move, and a financial infrastructure that gives them almost no visibility into either problem until it's too late. Most manufacturers retain the majority of their profits just to keep operations funded. Not to grow. Not to invest. Just to survive the float.
Note that this is before new tariffs drove sharp increases in aluminum and steel costs. Before most manufacturers reported rising raw material prices. Before supply chains got rerouted overnight and nobody knew what anything would cost next quarter. The margins are compressing from every direction and the financial infrastructure these businesses run on wasn't built to handle any of this.
The tech industry's answer has been the ERP: one system to run everything. Up to 75% of implementations fail because they break under the variability of real manufacturing. Purchasing, inventory, and receivables stay siloed. Leadership makes critical decisions on fragments instead of the full picture.
The opportunity hiding in plain sight
Here's what I believe: the biggest fintech opportunity of the next decade is in the small and mid-market manufacturers that have never been served by financial products designed for how they actually work.
The unlock is AI that can finally process the messy, unstructured reality of a manufacturing business. Purchase orders in seventeen different formats. Invoices that arrive as PDFs, emails, and sometimes still faxes. Inventory tracked in three systems that don't agree. For the first time, software can ingest that chaos and turn it into something a financial product can underwrite against.
The real shift is not better dashboards. It’s the ability to turn operational data into financial intelligence, and then into financial products. A system that watches your receivables in real time, predicts which customers will pay late, and offers same-day advances against the invoices that are high quality. Purchasing software that predicts what you will need, cross-references supplier pricing, and negotiates terms based on your actual payment history. The operational decision and the financial decision become the same decision.
A new generation of companies is already starting to emerge, building at the intersection of workflow, data, and embedded finance. They start by owning a workflow like billing, purchasing, inventory, quality and earning proprietary data from inside the operation. Then they become the financial layer the banks never could, because they understand the business at a level no bank ever will.
93% of American manufacturers have fewer than 100 employees. They make things the economy can't function without. They're profitable but cash-starved, sophisticated but underserved, and ready for infrastructure that actually fits. The founders who have seen this from the inside are the ones we back. If you're building in this space, I would love to hear from you.
- Kiswana