Injection molding shops live or die by cash flow—especially when tooling costs $5,000 to $50,000+ per project and lead times stretch 8–12 weeks. You'll burn through working capital fast if you're not intentional about invoicing, payment terms, and production scheduling. This guide walks through the cash flow realities of the molding business and how to keep money flowing instead of stuck in work-in-progress inventory.
The Tooling Cost Reality Check
Your biggest cash drain isn't always labor or materials—it's tooling. A single complex mold can tie up $15,000–$40,000 of your capital before you produce a single part. Many shops front this cost entirely, then wait 30–60 days for customer payment after delivery.
Structure your tooling quotes to require a 50% deposit upfront, with the balance due before mold release. Some shops invoice in thirds: initial deposit, mid-stage (after design approval), and final on mold handoff. This splits the pain and keeps your cash account healthier.
If you're bootstrapping, consider whether each new tool investment genuinely leads to repeat orders or whether it's a one-off. A customer ordering 100,000 units annually justifies a custom mold. A startup asking for 5,000 units with "maybe more later" might not.
Payment Terms That Actually Work
Net 30 is standard in custom manufacturing, but it's killing your liquidity. Negotiate strategically:
- Deposit + milestone structure: 30% deposit (before tooling), 40% on mold completion, 30% on delivery.
- Shorter net terms for smaller runs: Consider Net 15 for orders under $5,000 or for new customers you haven't worked with yet.
- Early payment discounts: Offer 2% off if payment arrives within 10 days. The 2% is cheap insurance against cash flow stress.
Track days sales outstanding (DSO). If your average invoice takes 45 days to collect, you're essentially financing your customer's inventory for 15 extra days. Aim for DSO under 35 days.
Production Scheduling and Work-in-Progress Control
WIP inventory is cash that's literally sitting on your molding floor. A typical injection molding cycle takes 30–120 seconds per shot, but a 100,000-unit run can still take 2–4 weeks of floor time, plus cooling and post-processing.
Batch your production by customer and due date. Don't start a massive run if you're unsure the customer will accept delivery on schedule—you'll be holding finished inventory that ties up working capital and warehouse space.
Cap your WIP value. If you typically carry $30,000 in active molds and in-progress parts, flag any job exceeding 40% of that threshold. Prioritize completion and shipment so you can invoice and collect sooner.
Building a Cash Reserve
Most injection molding shops operate on thin margins (8–15% net profit before tax). You need 2–3 months of operating expenses in reserve to weather seasonal slowdowns or a late customer payment.
Calculate your monthly burn rate:
- Lease / mortgage
- Utilities and maintenance
- Payroll (including your own salary)
- Consumables and material costs
If that's $40,000/month, your baseline reserve should be $80,000–$120,000. This isn't profit—it's operating oxygen. Build it steadily by reinvesting 20–30% of your monthly profit back into the business until you hit that target.
Material and Scrap Management
Resin costs fluctuate, and scrap rates directly hit your margin and cash position. Typical scrap rates run 5–10% on new tools, 2–4% on mature production.
Buy material strategically: bulk purchases (500–1,000 lb) cost 5–15% less than hand-to-mouth ordering, but only if you're confident you'll use it within 12 months. Regrind and resin blending can recover 20–40% of scrap value, but equipment and labor matter—calculate whether it's worth the effort.
Getting Found and Winning Larger Contracts
Growing your order pipeline is how you smooth cash flow over time. Listing your capabilities on a platform like Mercoly helps potential customers discover your services, compare capacity and pricing, and place orders directly—expanding your lead volume without the sales overhead.
Frequently Asked Questions
Q: What's a realistic payment timeline for a $30,000 injection molding project? A: Most shops expect 50% deposit when the purchase order arrives (covering tooling and material), 40% before mold release, and the final 10% on shipment; total timeline is typically 6–10 weeks from PO to payment completion.
Q: Should I require payment before shipping finished parts? A: For new or high-risk customers, yes—payment before shipment eliminates collection risk and protects your cash flow; for established customers, Net 15–30 is standard, but always invoice immediately upon shipment.
Q: How do I know if I'm overextended on WIP? A: If your in-progress inventory value is climbing month-over-month while revenue stays flat, or if you're holding finished goods for more than 2 weeks waiting for customer pickup, you're likely overextended and should pause new job starts until you clear backlog.
Start tracking these metrics today and revisit them quarterly—small improvements in payment timing and WIP control compound into healthier cash runway.