Business Growth Can Be Achieved with Purchase Order Financing
Do you ever worry about large contracts with massive amounts of inventory? If you’re a wholesaler, contractor or supplier, you may struggle to keep working capital on hand while completing these large orders. Rather than commit to a costly loan, consider using purchase order financing to keep your business flexible and your working capital fluid.
In order to keep up a steady supply of goods and materials, you need cash. One way to build up working capital for this type of business is to simply take out a loan. However, interest rates and monthly payments can cause more issues than you had before the loan. A great way to keep your company flexible is with purchase order financing.
If you haven’t used this type of financing before, it’s essentially a short-term payment plan that allows you to finance purchases for a specific order. You’ll work with a factoring company to secure a rapid turnaround loan to cover the costs of the contract.
One of the major benefits of this type of financing is the instant scalability it lends your business. Small businesses can easily take on a massive client and receive the financing they need to process the order efficiently. Typically, a large contract would take up all your working capital and leave you committed to the project and unable to handle any sudden expenses or emergencies. Using this financing strategy, you’ll be able to remain fluid and respond to the daily ebb and flow of your company’s finances.
Your customers can’t wait for weeks while you order the parts or materials you need. A major theme in purchase order financing is the complete control it gives you over your business. Leverage your marketing skills and confidently take on large contracts, while still taking advantage of any investment or growth opportunity that comes your way.
Few financing options can offer the same freedom and flexibility of purchase order financing. Although financing typically ranges from 70 to 100 percent, you’ll still be able to keep your accounts fluid and overcome any unusually busy or slow season your company encounters.
Determine for yourself whether this funding option is right for you. If you own a midsize or small business that requires extensive parts, materials or warehousing costs, then consider using this financing. You never know when you’ll need working capital, but with the proper financing package, you can always have it available for whatever season your business faces.