If you are running a wholesale, you may have often faced cash flow problems while trying to secure large orders. Competing for new business is difficult since clients continuously look out for the lowest price and quickest delivery. In addition to that, to complete these orders you have to use up your cash reserve to buy materials and start production. If you don’t have enough cash for this purpose, then you won’t be able to fulfill the big orders, and it will prevent your business from growing. In this situation, purchase order funding can help you tide over the financial difficulty. After receiving funds, you can afford to pay your supplier, and go ahead with the new projects.
How can purchase order financing be a viable financing option for a business? Think of this; when you are in a rut due to weak financial conditions, purchase order financing will enable you to capitalize on new business opportunities. Once the cash flow problem is solved, the large orders can be completed and delivered on time. It will enhance your company’s profitability as well as develop a reputation in the market. Furthermore, with the availability of PO financing, you will not incur additional debt, and your business’ financial liability will not increase. As it is a flexible funding, you can avail it as much as you need to cover expenses.
The basic methodology of PO financing is simple. A third party funding firm takes your purchase order and provides financing to the supplier. With this funding, the supplier will be able to complete the order and do the shipment. In this way, you can fulfill the order on time and receive payment from the client. Then you will pay a small percentage to the PO funding company, and keep the rest as profit. If your business is able to complete large orders consistently, its growth potential will increase significantly. In the future, when you receive large orders, your business will have the financial capability to complete them without any delay. Thus PO financing can be a practical solution to fuel your business with immediate cash that you need to deliver your orders and keep your business growing.