Purchase Order Funding may be the business solution you are looking for.
Do you have more orders than you can deal with? Is the absence of financing preventing you from fulfilling those orders? One of the most discouraging things that can happen to an entrepreneur is to turn orders away — excellent orders. Just because you don’t have the financial capacity to meet the cashflow need.
Obviously, you can try to get a business loan. Business loans have their constraints as business funding tools. They can be difficult to get. Most will have quite arbitrary limitations, so they don’t tend to grow with your business needs.
Would not it be great to have a business financing tool that could help you manage all your supplier payments — provided you had purchase orders from creditworthy customers? Would that help you close so business then?
That tool exists and is called purchase order funding. Purchase order financing is a funding product that is offered by factoring companies. The tool’s premise is really easy. As soon as you have a confirmed purchase order, the factoring company will arrange supplier payments, usually by letter of credit. When the order is delivered and paid for, the deal is settled.
And just how much does order funding cost? Well, it depends on the size of the order, the intricacy of the transaction and the business credit worthiness of the business spending for the products (your consumer). Typically, the financing expense will be between 2.5% and 4.5% of the order.
Purchase order funding is a terrific tool but it is not for everyone.
It works best if your revenue margins are in between 15% and 30%. Also your clients should be medium sized (or large) companies or federal government agencies. Purchase order funding can nearly eliminate your out of pocket costs if you fulfil these criteria.
If you own a reseller or supplier and have more purchase orders than monetary capacity, consider order funding as the tool that can help you close those orders and grow.
One of the most discouraging things that can occur to a business owner is to turn orders away — good orders– due to the fact that you do not have the monetary capacity to fulfil them.
If you think your transactions meet these requirements, just click the image of Dragan and let us know how to contact you. A Professional Business Financing Representative will be in touch with you soon.