Why Small Businesses Use PO Financing



Anyone who runs a small business has enough to worry about without having to deal with the struggles that come from unpaid purchase orders. If you are concerned with cash flow within your business, you may want to consider PO financing. Contacting your lender will help you understand a little bit more about purchase order financing, but the following are some of the reasons why small businesses often find success with the process.

One of the first reasons a small business might want to use PO financing is that it allows the company to do bigger things than they thought possible. If you are worried about taking on a big job because you don’t have the funds to cover costs of production, you might be tempted to turn it down. When you have your purchase orders financed, you don’t have to do that. Instead, your lender will give you the money you need for the materials and supplies it will take to complete the order. This makes your clients happy, it makes you happy and it makes the lender happy.

Another reason PO financing is great in a small business situation is that it includes collections. Many small business owners simply don’t have the manpower it takes to go after their clients for payment. Their own purchase orders are not paid because they are focused on other aspects of the business. If a lender buys your purchase orders, they then become responsible for collecting payment, and you don’t have to worry about it anymore.

Something else that makes purchase order funding an enticing solution for small businesses is that it’s not technically considered a loan. You are basically advanced the funds you need to stay in business. When the purchase orders are paid in full, the lender has the money in hand, which means you don’t have to worry about late fees and interest that will make payback too expensive. Without the loan on your history, you are more likely to qualify for a loan if you decide you need one for another reason.

As you can see, there are some real benefits for small business owners considering PO financing. If you run a business that uses the purchase order system, it might be time to talk to your lender about financing. Doing so could be the difference from remaining a small company with a weak cash flow to handling bigger jobs and growing your business. Contact a lender today to learn more and to see what you need to do to be qualified.