The renaissance of the manufacturing industry through financing
Features
February 7, 2025
This phenomenon, which affects everything from textiles and plastics to auto parts, generates a liquidity crisis that impedes investment in technology, process modernization and, ultimately, economic growth. In this article, we explore how this crisis affects manufacturers and customers, and how the partnership between R3D and Xepelin is revolutionizing corporate finance through agile, digital fintech solutions.
A textile factory with a 15-year history saw its production plummet by 40% due to payment delays of up to 90 days. Without liquidity to purchase raw materials, the company was forced to resort to bank loans at extremely high rates, threatening its continuity. Production fell by 40%, and Jorge, the owner, recalls: "We had orders, but without money, it was like running on empty". To survive, the company resorted to bank loans at rates of up to 20% per annum, a burden that threatens its continuity. The situation worsened when another client, a sports brand, also delayed payments, forcing Jorge to consider layoffs. Finally, an alliance with a Fintech allowed them to advance invoices, saving the company and allowing them to reinvest in operations.
A plastics manufacturer lost a million-dollar contract because it was unable to renew its machinery because its customers had payments outstanding for up to 120 days. Lack of capital prevented the technological upgrading necessary to compete in a globalized market.
In Monterrey, a family-owned company that produces plastic food packaging faced a hard blow. Its main customer, a supermarket chain, extended payment terms to 120 days, freezing its cash flow. Maria, the CEO, explains, "Waiting four months for our money was unsustainable; we couldn't plan." This delay prevented them from buying new machinery to produce lighter, more environmentally friendly packaging, and they lost a million-dollar contract when they were unable to compete in a tender. The loss of revenue led to job cuts, and the company was on the verge of closure. However, an invoice financing facility gave them immediate liquidity, enabling them to acquire the necessary technology and win back contracts, demonstrating how delays can block growth, but solutions can turn things around.
Although KidKraft's case is international, its bankruptcy in 2024 due to unsustainable debts resonates in Mexico, where lack of liquidity is one of the main causes of bankruptcy for 35% of manufacturing SMEs, according to Forbes Mexico.
KidKraft, an international toy manufacturer, filed for bankruptcy in 2024 due to unsustainable debts, with assets and liabilities between $100 million and $500 million, according to KidKraft files for Chapter 11 bankruptcy. Although no late payments are specified, experts suggest that cash flow problems contributed, reflecting common challenges in Mexico. Here, 35% of manufacturing SMEs go bankrupt due to a lack of liquidity, according to the Association of Mexican Entrepreneurs (ASEM), a figure that underscores the urgency of solutions. For a Mexican manufacturer, seeing KidKraft go under is a reminder: without access to timely financing, even established companies can collapse.
Late payment triggers a ripple effect throughout the supply chain. When a supplier is not paid on time, it is forced to reduce staff and cut back on investments, which generates:
The crisis of late payment to suppliers is a challenge that affects the competitiveness and stability of the Mexican manufacturing industry.
However, the integration of financial solutions and the digitization of the industry along with the opportunities offered by Nearshoring offer a path to recovery and growth for the industry.
Relevant Data to Understand the Impact
R3D offers a digital tool for manufacturers, connecting more than 100 suppliers in sectors such as textiles and plastics with customers in Mexico, the United States and Canada.
The digitalization of processes and our production management process have allowed us to reduce operating times by up to 40%, facilitating the search for new customers and improving efficiency in the supply chain.
Our purpose is to provide the industry with technological tools to boost its competitiveness in the North American manufacturing integration.
Xepelin offers agile financing solutions within 24 hours, assessing risks through data-driven algorithms. This eliminates time-consuming traditional processes and provides the complex unsecured credit that SMEs require to maintain their cash flow. Predictive tools anticipate payment delays and provide immediate liquidity, making a difference in a competitive environment.
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