Boost Your Business With Purchase Order Financing

Boost Your Business With Purchase Order Financing

If you make or trade goods and your business relies on purchase orders to keep things organized, you have some very unique financing options that can help you grow your company faster than you probably thought possible. That’s because your business model opens you up to a unique form of financing using your purchase orders. As a result, you can get an advance against the order’s value and then use that advance to cover the costs of making and shipping the goods. Then, when the payment comes in, you get the remainder of what is left after cash advance fees and the advance itself are deducted, making it easy to see where your profit comes from.

Cash Bottlenecks and Business Growth

Purchase order financing helps businesses get out of the bottleneck caused by having a lot of work done but not a lot of the invoices paid yet. During that time, your crew can wind up furloughed if you don’t have the cash to buy supplies and start on new orders. It can also make those new orders late, complicating your relationship with those clients. You can try to ease the bottleneck by tightening invoice times and following up on accounts, but you can’t help it if there’s just a time when a lot of customers need to pay. If you have orders waiting to start, though, your purchase orders can provide the starting capital to get the work done while you wait for your other payments.

Never Turn Down a Job

Another effect of having access to the cash you need to start jobs whenever they come up is the ability to take every order, even when it’s unusually large or oddly timed. Since you can use the value of the order for the working capital you need to move forward, you can accept it with confidence if you know you have a purchase order financing lender ready to work with you.

Avoid Adding Loan Debt To Your Company

Since purchase order loans are based on an asset, they avoid adding a lot of unsecured debt to your credit report. The fact that they are paid off when you get paid for the order also means they avoid adding a lot of term loan debt to your monthly overhead. As a result, they don’t usually complicate attempts to borrow toward those ends when you need to expand your services or move into a bigger shop. That makes purchase order financing a robust cash management tool while you’re working on applying for those loans, too.