How to Know if PO Funding is Right for Your Business
When you’re a small company that’s doing well, you might get some business from a large company. If it goes well, they may place a larger order and with it comes a big opportunity for your business to grow. However, taking such a large order may mean purchasing products with upfront money you don’t have, which you probably won’t be paid for until a period of 30 to 60 after the shipment is received. When turning down such an order is out of the question, a small business can turn to PO funding.
What Is Purchase Order (PO) Funding
PO funding is a type of financing available to businesses who need extra capital to complete one or multiple customer orders. A company may need PO funding because they have a cash flow issue or simply don’t have the funds to cover the costs. The funding is necessary for the company to fill the customer’s orders so they don’t lose the revenue.
Advantages of PO Funding
Compared to other forms of bank financing, PO funding is fairly quick and easy to qualify for. In addition, it does not require a business to have great credit as long as the client making the purchase order is creditworthy. When the client placing the order has a strong credit history, which is true of most large, established buyers, PO funding is easy.
Is PO Funding Right For My Business
Figuring out if PO funding is a good option for your business easy to do. Businesses that will benefit the most from PO funding tend to deal in manufactured good, not services. The orders you seek to finance should have a profit margin of 20 percent or higher and the customer paying for it should be established and creditworthy.
If your business meets this criteria, PO funding could be the solution you’ve been looking for. With PO funding available to meet your customer’s substantial order, you can take advantage of an excellent growth opportunity.