Purchase order financing is one of the most innovative and advantageous business funding solutions available. Here are the 4 key reasons why this option is growing in popularity, and helping businesses of all sizes stay strong and successful:
Enables business to fill large orders.
Many small businesses and mid-sized organizations get stuck in a vicious cycle: they don’t have enough working capital to fill a large and profitable order, and until they fill the order they won’t have enough working capital. That’s where purchase order financing enters the picture and ends the spiral — because it provides businesses with a rapid (more on this in a moment) cash infusion that is secured by the purchase order itself; not on existing collateral or high credit scores.
Funds can be available within days.
Banks loans can take months to process, which for most businesses is a non-starter — since if they don’t have the cash to fill a purchase order, then their customer will quickly become an ex-customer. Purchase order financing can be set-up quickly; often within a matter of days. What’s more, the cash is made available in a lump-sum amount vs. installments. As such, businesses can take advantage of volume purchase discounts, and negotiate more favorable terms with suppliers and vendors to increase their profit margin.
There is no equity loss.
Many business owners are understandably reluctant to raise funds by selling a part of their business; especially since investors and VCs will want very favorable terms given that they know the funds are essential. With purchase order financing, there is no equity loss whatsoever. Business owners retain full ownership of their business (or however much they had prior to receiving the funds).
It scales with the business.
The old saying “you have to spend money to make money” has a cousin: “when it rains, it pours.” Indeed, it is not uncommon for businesses that take advantage of purchase order financing to find that their well-earned reputation for delivering on-time generates even more purchase orders (from the same customers and from new customers). Purchase order financing can tightly scale with a business, and allow it to efficiently and quickly access more funds as the need arises. In other words: let it rain more purchase orders!
To learn more about purchase order financing, and to determine if it’s the right funding solution for your business, contact the National Business Capital team today or complete our two-minute application for a funding decision within 24 hours.
If you’re looking to read more about how business loans can provide your business an opportunity to grow, check out our latest eBook “7 Profitable Opportunities that You Could Miss Without Business Funding”: