What Is Toll Processing?

Toll Processing

Toll processing refers to a business arrangement in which a company (the toll manufacturer) performs specific processing or manufacturing services for another company (the client) using the client’s raw materials or components. This arrangement allows the client to outsource certain stages of production without needing to invest in the necessary equipment, facilities, or expertise. Toll processing is commonly used in industries such as metalworking, chemicals, and pharmaceuticals, where specialized processes like rolling, cutting, coating, or mixing are required.

The toll processor charges a fee for their services, and the finished product or intermediate material is then returned to the client for further use or sale. This arrangement helps companies reduce costs, optimize production efficiency, and focus on their core business functions.