Purchase Order Financing: How To Grow Your Business and Boosting Working Capital
Protecting cash flow can be one of the most challenging and most important parts of running a business. If you sell products using purchase orders, you may sometimes find yourself needing to buy presold goods without enough cash to comfortably make the purchase. Purchase order financing may be a tool that can help you ensure the financial usefulness of purchase orders.
How Purchase Order Financing Works
Despite the name, PO financing is not a type of loan. Instead, it is an advance on the revenue you will earn from completing the purchase order. This financing gives you the money you need to pay your supplier for inventory to fulfill the order. Unlike some other types of financing, the money from PO financing can only be used for the specific product and items associated with it.
When your customer pays the invoice on the purchase order, the financing company is repaid the advance amount plus fees. It is a simple setup that can help almost any business that uses purchase orders.
The Benefits of Purchase Order Financing
PO financing can help businesses in many situations. Since it isn’t a type of loan, this option is available even to companies with poor credit or very little credit history. Therefore, it is popular with startups and businesses that have encountered poor financial situations. The following are some of the other benefits:
- Take on Big Jobs: With PO financing, you don’t have to worry about the size of a potential job. Instead, you can confidently take on large and unexpected orders knowing that you will have the funding necessary to fulfill them.
- Satisfy Customers: You can consistently deliver complete orders on time with PO financing. This is a great way to avoid ever having to delay due to funding issues.
- Boost Working Capital: Paying your suppliers before your customers pay you can put a strain on your cash flow. With PO financing, you can boost your cash flow and working capital to help grow your business.
- Reach Your Growth Goals: Trying to grow your business while struggling with financing woes isn’t easy. However, when you can focus just on bringing in and sending out new orders without thinking about the funding, you can quickly reach your growth goals.
Purchase order financing may be the solution to your working capital needs. Learn more today and determine whether this is the right option to empower your business growth.