Companies often need to explore alternative funding options when tight on cash flow. Borrowing money is essential to successful business operations, regardless of your company's industry. Whether you're embarking on a new project or have a large order you need to fulfill, the purchase order (PO) financing can be the right business financing solution. If you don't have enough cash to run your company freely, it's time to explore the benefits of purchase order financing.
Benefits of Purchase Order Financing
The purchase order financing advantages are numerous, especially for those who can't find the proper funding with a traditional financial institution. It's crucial to secure financing so you can successfully operate your business, and cashing in on purchase order financing can be an excellent way to do that. Discover why PO financing and its open credit line can be an ideal funding solution for your business below.
1. Take on More Business
Many companies find themselves growing faster than the money is coming in. When this occurs, purchase order financing can be a massive advantage. If your cash flow is strapped and your business is in rapid growth mode, business needs need upfront costs that might not be met. This is where purchase order financing comes in. Your company can get the supplies it needs without disrupting operations or waiting for increased cash flow.
2. No Long-Term Commitment
Purchase order financing and business loans are not the same. Receiving funding using a purchase order results in cash for your business without a long-term commitment. Many business owners don't want a long-term loan holding them back from financial freedom.
So, they turn to purchase order financing to pay for 100% of their costs in one lump sum without worrying about paying the money back in installments. It's flexible and transaction-focused, offering every business owner the opportunity to solve cash flow problems.
3. Low Fees and Costs
One of the best benefits of purchase order financing is that it's one of the most low-cost funding solutions. Utilizing customer orders to unlock financing options is a cost-effective way to get the money your business needs.
With the advance funds, you can receive the necessary supplies and keep your company running smoothly. Plus, you can complete customer orders and continue profiting while using purchase order funding. Fees are low, making it an accessible option for all businesses.
4. Easy to Qualify
Are you having trouble securing business funding? PO financing is easy to qualify for, even if you have a short track record in business or need funding with a low credit score. Any business owner that struggles to get approved for a traditional loan can turn to PO financing.
If you have outstanding purchase orders, you're a prime candidate for this type of funding. The requirements are much less restrictive, and your PO financing lender will be more interested in your customers' payment history than yours.
Plus, you won't have to sign a personal guarantee with purchase order financing. Many loans require the business owner to sign a contract so the lender can seize your assets to get the money back if the business can't repay the loan. Thankfully, PO financing is considered non-recourse. If the customer refuses the shipment of goods, doesn't like the product, goes broke, or has another reason for not paying, the financing company loses its money. You won't be responsible, which is a huge bonus because it means less risk for you.
Is Purchase Order Funding Right For You?
The ideal candidate for purchase order financing is any business with a tight cash flow that needs to purchase materials before fulfilling orders. That's all you need to be a great candidate for purchase order financing. Additionally, companies starting a new project or large order can use this flexible type of funding. Purchase order financing is right for:
- Startup businesses with cash flow issues.
- Companies that lack cash for new projects or large orders.
- Businesses that cannot get approved for loans or business lines of credit.
- Companies who want to avoid the long-term commitment of a loan or the costs of a business loan.
- Fast-growing businesses.
Get Started With Purchase Order Financing
Purchase order financing helps many businesses continue operating smoothly when cash flow dips. If traditional bank loans haven't worked out for your company, consider this alternative type of financing to cover business expenses. A regular business loan can't offer you the same flexibility as PO financing can.
Lenders will quickly provide working capital in exchange for the purchase order if your customer has an excellent financial track record. Solve supplier costs and make great profits with low purchase order financing fees. Much like invoice factoring, many businesses benefit from the funding opportunities provided by PO financing.