In recent years, purchase order financing has been gaining popularity as a way to finance a company that has received a large purchase order. It can be a great solution for companies that need financing to fulfill a large purchase order. PO financing:
- Is designed specifically to help wholesalers and distributors who resell products to commercial customers
- Is used by companies who need funds to pay suppliers
- Helps companies grow past their financial limitations
Here are the most common advantages and disadvantages of purchase order financing:
- It’s much easier to get than bank financing
- It can be set up quickly
- The line can grow with your revenues
- It’s available to small companies (and start ups, in some cases)
- The size of the line is limited only by the capabilities of your suppliers, the credit quality of your customers, and your ability to execute orders
Note: If your company manufactures foods directly, consider supply chain financing.
- It only helps companies that resell finished goods that don’t require assembly, installation, or customization
- It only covers direct supplier expenses
- It only works in transactions that have a gross margins of 25% or more (with exceptions)
Need purchase order financing?
We are a leading purchase order finance company and can provide competitive terms. If you would like more information, get an online quote or call us at (877) 300 3258.