Small businesses often have difficulties with cash flow. This becomes particularly problematic when you receive orders from clients but lack the finances to fill them. Purchase order funding enables you to accept the orders, obtain the supplies you need, and deliver the products that your customers require. Here are some basics on how this form of financing can increase your company cash flow.
How Purchase Order Funding Works
Typical purchase order details the amount of product requested by the buyer along with the terms and conditions of payment and delivery. If you lack the resources to fill the order, you have to turn it down and your clients will go elsewhere. Purchase order funding gives you the ability to accept and fulfill these orders.
The Benefits of Purchase Order Funding
When your company has access to purchase order funding, your sales department can pursue orders of any size with confidence, knowing that the required supplies can be procured and the orders can be filled. This form of financing is much quicker and easier to obtain than traditional bank loans so that your customers will not have to wait an inordinate amount of time for the products they require. It doesn’t matter if your business has not yet earned a high credit rating, because the financing company looks at the creditworthiness of your clients when you apply for purchase order financing.
Budgeting Aspects of Purchase Order Funding
Although purchase order funding involves a fee for the financing company, this expense is more than made up for by the additional orders you are able to take on and the resultant increased cash flow. You are able to budget more efficiently for supplies without overextending yourself.
Is Purchase Order Funding Right for You?
Companies that often use purchase order funding include importers, manufacturers, wholesalers, distributors, and assemblers. However, this form of financing can work well with any type of business, large or small, just starting up or well-established.
For more information on purchase order financing, contact Steadfast Funding Partners.