5 Big Reasons to Use Purchase Order Financing

Purchase orders don’t have to be the headache is sounds like. Thanks to new technological advancements there’s now a system for every step of the process from start to finish. This means that whether your business is large or small no longer matters. And if you can utilize a purchase order you may also be able to use them for financing when necessary. Here are five great reasons to use purchase order financing.


  1. Not a Loan

When one company pays or advances the money to another company’s supplier to cover the goods needed to complete an order, this is called purchase order financing (PO financing). It is not a loan. The advance may not always be for one hundred percent, but it will cover the costs so that the order can be completed. The finance company will then collect the invoice from the customer, getting their money back as a small fee from you. They then send you the rest. However, since it is not a loan, you don’t have to worry about your company’s credit.


  1. Accept New Business


No one likes to have to turn down a job. And finding out that a company can’t accept an order because they don’t have enough cash on hand to cover supplies, could severely damage a company’s reputation. PO financing provides the perfect solution to this problem. when the cash is advanced to the supplier, a company can still get the materials they need and accept client business.


  1. Your Business Won’t Need Perfect Credit

You finance company will be collecting the invoice from your end-client. They’re more worried about your client’s credit than yours. After all, that’s where the money is coming from. This means that even if your company has only average credit this may still be a financing option for you.

  1. They Collect the Payment


Your purchase order financing company will be the one collecting the payment. This will actually help you. There’s no need to worry about hassling anyone to pay on time because your financing company already has that handled. After they collect and subtract the agreed upon fee, they’ll send you the money.


  1. You Can Still Take Those Big Jobs


The big jobs tend to cost the most money. After all there are a lot of expenses involved, from paychecks, to supplies, to packaging. And your company will have to cover it all. Many times you won’t be paid until the job’s complete. Purchase order financing allows you to take on the big clients. When the money is advanced to your supplier you can finish those orders. This will allow your company to experience growth.