For brands just starting out, or for those that don’t have a ton of capital to use as a cushion, paying suppliers can sometimes be a burdensome headache that adds to the stress of growing a business. Even normal brand-growing pains can be intense, and business owners often feel they’re walking a fine line of being able to keep product moving, and maxing out their financial capacity to simply pay the bills. Without a small business loan, a line of credit or some other source of funding, it can feel impossible to grow.
PO financing options can help stressed business owners figure out how to pay suppliers the purchase order costs they need to, while keeping cash on hand so they can focus on more important aspects of their business…like continue to grow.
If you’re lacking an influx of capital, purchase order financing companies may be able to offer much-needed capital, so you can sail through the process of your operations, from a customer ordering, to the manufacturing of your product, to the shipping and delivery, without the stress of wondering how you’ll keep up with the financial aspect of POs.
Let’s start with the very basics. First, a customer orders from you. Then, simply by providing a letter of credit, you can use purchase order funding to order from your supplier. The supplier will produce and ship the product you need, confident that they’ll be paid.
Learn more about how PO financing works with our detailed step-by-step process below.
Purchase order financing is a fairly simple concept. If you have a number of orders come in, or even just one large order, and you think you’ll have a difficult time paying your supplier up front to get the order processed and moving, you can utilize PO financing to ease pressure related to cash flow problems until you’re paid for the order.
One of the many goals businesses often have is reducing as much credit reliance as possible and becoming a cash-positive business. Purchase order financing can be an effective way to do this, because it can essentially eliminate the gap between the time you submit a PO, and when an invoice is processed, fulfilled and paid so you can settle up with your supplier.
Competition is everything in business, and PO financing can offer a huge competitive edge. It has the potential to allow brands to remove the roadblocks a lot of other businesses likely face as they try to compete against huge brands with tons of buying power. Not having to rely on supplier credit, increasing your working capital, can really be a game-changer as you grow your brand and increase your reach.