Considering the upcoming US holidays, where seasonal sales will be at their peak, manufacturers, suppliers and retailers will be vying to get a chunk of the pie called ‘profit’. During this time big organizations outsource their manufacturing work to relatively smaller organizations by creating purchase orders. Small businesses often don’t have enough working capital to incur expenses to fulfill a large order. Such businesses may end up losing a good business opportunity. Amidst the double whammy of a cash crunch and time constraints, Purchase Order (PO) financing can fund your order so that you can pay your supplier for materials and begin production.
The situation mentioned above is a common scenario. Oftentimes small businesses receive orders in bulk from a reputed customer, but don’t have the required cash to fulfill it. That’s where a PO financing company comes into play in terms of funding the supplier for raw materials. For example, you may have received a large order, and to start production, the supplier wants you to pay cash on delivery (COD) or to make a partial payment. At the same time, other expenses such as shipping, packaging, wages etc. should also be met. With this type of funding, you will be able to fulfill the order and gain a good profit margin after deducting the charges payable to the financing firm.
For small businesses that are mulling over alternate financing options, a solution like this could be of great help. PO financing can help you in the following ways:
PO financing works through the following steps:
With the help of factoring, you can regulate cash flow by identifying the situation when you will require it. This flexibility makes financing through a purchase order an attractive option for small businesses.
The situation mentioned above is a common scenario. Oftentimes small businesses receive orders in bulk from a reputed customer, but don’t have the required cash to fulfill it. That’s where a PO financing company comes into play in terms of funding the supplier for raw materials. For example, you may have received a large order, and to start production, the supplier wants you to pay cash on delivery (COD) or to make a partial payment. At the same time, other expenses such as shipping, packaging, wages etc. should also be met. With this type of funding, you will be able to fulfill the order and gain a good profit margin after deducting the charges payable to the financing firm.
For small businesses that are mulling over alternate financing options, a solution like this could be of great help. PO financing can help you in the following ways:
- Enable you to accept larger orders from reputable customers;
- You can pay your suppliers for raw materials and get the orders completed;
- Receive professional service during the entire order fulfillment process.
PO financing works through the following steps:
- You receive a large order, and client sends you a PO;
- You contact the supplier for raw materials;
- Your financing company pays your supplier through a Letter of Credit or a financial guarantee;
- Your supplier delivers the required materials for production and shipment of the order;
- The financing company receives the invoiced payment from your client;
- The financing company pays you the profit after deducting its fee.
With the help of factoring, you can regulate cash flow by identifying the situation when you will require it. This flexibility makes financing through a purchase order an attractive option for small businesses.