Increasing Cash Flow Can Be Achieved With Purchase Order Financing

Startups and small businesses often find themselves seeking opportunities to increase cash flow. Maybe you don’t have large enough invoices to consider accounts receivable financing, but you’re getting orders and need to purchase supplies. Purchase order financing might be an option for the business. Getting familiar with this type of financing can help you understand how it can fit into your needs and goals.

What Is Purchase Order Financing For?

Purchase order financing takes advantage of a large order. It’s similar to accounts receivable financing, except you’re selling the purchase order to the lender. The lender gives you an advance on the purchase order, which lets your business purchase inventory or equipment to fulfill the order. The customer pays off the purchase order to the lender.

This type of funding is very flexible. Businesses typically don’t need years of financials. Even if your business has less-than-stellar credit, you may qualify for PO funding. Most lenders can process purchase order financing quite quickly, allowing your business to make purchases and provide excellent customer service.

Improving Cash Flow

When you find your business cash flow waning, whether due to a slow economy or over-extension, purchase order financing can help you get cash quickly. You don’t give up valuable equity to an investor, nor do you have to wait weeks for a traditional loan to get approved. PO financing can solve your problem. You can fill orders quickly, giving your business a better reputation and increasing your credibility in your industry.

The cash you receive from PO financing can be used in any way you want. It’s less restrictive than traditional loans. Using this funding method can help you stop worrying about your budget and look toward the future.

Does PO Funding Affect Your Bottom Line?

Purchase order financing can be seen as an additional expense. The lender only gives you a percentage of the actual purchase order, in order to make money for their own business. You have to weigh the pros and cons of having enough cash to fulfill business needs against the cost of getting the cash. Using your cash wisely by only purchasing the supplies you actually need can help you from overextending yourself.

Stay on top of your cash flow situation. Know the options for times when your cash flow wanes. You’ll be less stressed when you understand what your lender can do for you and how much time it will take to get the cash in your account. Purchase order financing might solve your problems, provided you’re using it wisely.

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