A Better Way to Fund Your Business Growth
Sometimes it can be difficult to grow your business when you’re relying on clients to pay their invoices, so you can fund your orders. Purchase order financing is a great solution to getting the working capital you need in order to increase your sales. With PO financing, you can receive a cash advance for goods that have been ordered, but not yet delivered. By having adequate cash-on-hand, your company will be more than capable of accepting new customers and taking on larger orders.
How Does Purchase Order Financing Work?
PO factoring can be a perfect funding solution for some companies. If your minimum gross profit for transactions is at least 20% and your transactions are typically over $100,000, your business will probably qualify. First, after a brief conversation, Factor Finders will connect you with one of our funding partners that specializes in purchase order financing. Then, your company will supply a written PO for items ordered by your customer, as usual. The factoring company will advance your supplier up to 100% of the total amount. Then, your PO factoring company will collect the invoice from your debtor (your customer). The PO financing company will take a small fee for advancing you the money, however, it allows you to take on bigger and better clients.
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Why Use Purchase Order Financing?
Purchase order financing can be extremely advantageous to customers who need to fulfill orders, but don’t have the cash on-hand or up-front to do it. Other advantages are:
- Qualifying is easy, even if you’ve been turned down in the past by a traditional funding source
- Your credit doesn’t matter–your factoring company is only concerned with the credit of the company ultimately paying the bill for the purchase order
- Opportunity for more growth! If your business is growing so quickly that you can’t keep up, PO financing will allow you to have a steady cash flow so that you are able to handle new and incoming orders
- PO financing is NOT a loan–it simply advances you the cash that you would have eventually received from your invoice. This allows your company to create goods without having to wait for other clients to pay their bills so you have working capital to proceed.