← Back to context

Comment by willcarkner

5 hours ago

Wow. Sounds like a super interesting product. Hadn't considered lines of credit yet, but definitely would be valuable to some higher ticket customers.

3 comments

willcarkner

Reply
structural  5 hours ago

We currently use a small US contract manufacturer that works pretty much as you say. The turn times are terrible (7+ weeks, not 7 days), and this is a major issue, but there are exactly two reasons we continue to use them:

1. Line of credit - we are not billed until we take delivery of tested product. 2. Willingness to handle high mix, low volume products. One product line example: a dozen SKUs with 95-98% parts in common on 2 PCBs, a single set of parts (that we aren't billed for up front) and quoting to build 20 of SKU 1, 50 of SKU 2, 10 of SKU 3, etc. without charging 2-3x the price.

We manufacture in the research / test equipment / defense space and I've heard similar things from other small hardware companies that are like us.

  • amirhirsch  1 hour ago

    My experience with lines of credit isn't unique, and I think it's one of the underrated advantages of doing business in the US: we have a sufficiently stable commercial legal system that a huge amount of the economy can run on credit.

    I have thought that there is a big opportunity financing components by optioning the sale of overstocked parts ahead of time. For a consumer electronics product that had heavy Q4 sales, my annual sales were entirely dependent on how many chips I could order by October 19, but then I'd have excess stock every January because things are sold in reels of varying sizes.