The Government must do more to inform manufacturing firms about the financial assistance available to them, auditors have said.
A report published today by professional accounting body ICAEW said the Government needed to raise awareness of capital grants and also urged ministers to continue providing tax incentives to manufacturers.
Bob Neate, a member of the ICAEW working party behind the report, said: "The Government needs to become much better at sharing information on available capital grants and schemes, while the manufacturers have to improve their communication with all finance providers and other important stakeholders about the sector's cyclicality.
"More than in any other sector, manufacturing businesses and their financiers have to have nerves of steel; they must be prepared to ride out the less good times in the economic cycle to reap the long-term rewards.
"If people don't understand the cyclical nature of the sector and its requirement for investment before the returns are realised, the sector's growth potential is at serious risk and the rebalancing of the UK economy towards manufacturing would become impossible".
The report said: "Some companies appear not to be fully aware of the range of funds that are available from the UK Government and from EU sources, or they are unsure about the criteria for qualification.
"Local Enterprise Partnerships have noticed that there is difficulty in identifying grants and soft lending incentives available from various agencies, and are actively taking steps to help others improve awareness.
"It is essential that Government continues to raise awareness of the availability of capital grants to help companies. Such grants could reduce the need for companies to rely on lease finance or invoice discounting to raise money for capital investment."
The report added: "If UK manufacturing is to prosper, Government should also continue to provide tax incentives as a lever to help manufacturing companies invest and create employment."
A Department for Business, Innovation and Skills spokeswoman said: "Manufacturing is crucial for our recovery and to long-term growth.
"That's why we've launched the reformed Manufacturing Advisory Service to inform businesses about the finance and support available to them, such as the Advanced Manufacturing Supply Chain Initiative that is strengthening UK supply chains and the Regional Growth Fund that only this week announced £506m to help kickstart British businesses across the country.
"We also brought more than 200 manufacturing business leaders together earlier this year for our annual manufacturing summit so they could discuss with ministers first-hand what support they will need as the Government continues to put manufacturing at the heart of its growth programme."
A copy of Audit Insights: Manufacturing is available here.