Purchase Order Financing Can Boost Your Business
Many types of financing are available for your business to have access to the cash it needs to operate effectively. One of these is purchase order financing. This is different than other methods because you are using your purchase orders as collateral. You may have customers wanting certain items or products, but you do not have sufficient cash flow to complete those orders. With PO financing, you can show a lender that you will soon have cash coming in for this order, but you need cash now to complete it. There are various reasons why this type of funding should be utilized by certain businesses.
No Credit Check Required
A lot of loans require you to submit to a credit check so that the lender knows what your score is. A low score can prevent your company from getting the financing it needs. However, purchase order financing is different. The lender instead looks at the credit rating of the client needing the product. This is to be sure that client can actually pay you on time so that you can pay off the lender. If anything goes wrong, your credit score remains intact.
Quicker Access to Funding
PO financing also works much faster than other loans. You will not hear back for several weeks about whether you were approved for some types of loans, and it can take several more days after that to actually get the money in your bank account. With PO financing, you will hear whether you were approved within a couple days. This allows you to get the money you need to fulfill an order much faster, so you never have to slow down.
Purchase order financing does not carry as high of interest rates as other methods of funding. For other loans, you may lose out on most of your profit margin to high interest rates. A purchase order lender will allow you to hang onto most of your profits, so your business keeps more money. There are some fees you will have to pay, but these are generally minimal. This allows you to reinvest in your business and grow.
Numerous financing options are available, and they all come with their advantages. However, PO financing comes with benefits you are not going to get elsewhere, so it would be prudent to consider it heavily. Once you find a lender that offers purchase order financing, you can be confident that you will soon be able to move forward with a large order.
To Learn more about Purchase Order Financing and if it’s the right choice for your business, contact Revap Group Capital at 708-478-9660 today.