Business owners sometimes experience intense frustration when they receive orders but lack the cash on hand to fund them. An effective solution to this difficulty is purchase order financing. This involves partnering with a funding company that pays your supplier. After the supplier completes delivery, you invoice your customer and then sell the accounts receivable to the funding company, which sends you a partial advance and then the balance, minus its fee, when your customer remits payment. Here are some of the benefits of this method of financing.

Qualify Easily

One of the greatest advantages of purchase order financing is its availability to new businesses and startups. Traditional banks and credit unions typically offer loans only to businesses that can demonstrate success. However, funding companies that offer purchase order financing will consider your potential for growth. Even if your credit rating is poor you can still qualify, because the funding company is more concerned with your clients’ creditworthiness.

Accept Large Orders

Taking on large orders from important customers requires a significant amount of working capital. Using purchase order financing, you can accept these orders and grow your business instead of hindering growth by turning them down due to lack of funds.

Avoid Debt

Purchase order financing is an advance on future working capital instead of a loan. Once your client submits payment to the funding company and then you get paid, the transaction is complete. Throughout the process, your business remains free of debt.

Save Time

During the process of purchase order financing, the funding company takes over the collection of payments from your customer. This relieves your employees of the tedious task of debt collection, allowing them to focus on other activities that help to grow your company.

For more advice on assisting business growth through purchase order financing, get in touch with Toluca Lake Capital.