How Purchase Order Financing Can Help Finance Your Start Up Business
A Large Customer Order? Is It A Blessing or Curse! For many startup businesses, obtaining that first large retail order is a cause of celebration. YES! It’s a confirmation that not only do you have a great product, but you now have a retailer eager to sell your product to their customers. Unfortunately sometimes those orders come in and your business doesn’t have enough working capital to fulfill the order. The upfront cost to manufacture the product at that large of a scale is prohibitive. Now you need to find a bank willing to provide you with a large short term loan. As a startup business, you know that the banks aren’t eager to give large loans to new businesses.
So what do you do? Tell them, thanks for the large order, but no thanks? We can’t fulfill them? Or hey, can you make your order smaller? How will that make your business look? Customers who were refused
once may never call you again to request another order. So do you gamble it all and deplete your working capital, forgetting about your other obligations such as, payroll, taxes, and utilities, rent…. And hope that they pay you immediately after receiving the merchandise? Do you call family and friends asking for a loan? That’s where purchase order financing steps in. Purchase Order Financing and Your Business Why is purchase order financing so attractive to startup businesses? For the same reason businesses with credit problems turn to PO financing. While a bank looks at your company’s finances, purchase order financing companies look at your customer’s financial strength. So it doesn’t matter if you are a brand new business with no business credit, and weak financials. Or even a well-established business with bad credit. If your clients are credit worthy, purchase order financing can help you fulfill their orders.
No Need To Deplete Your Current Working Lines Of Credit
A new business can benefit greatly from Purchase Order financing. Working capital is the life blood of your business. You don’t want to deplete it. You never know when an emergency will arise and you need your working capital line to meet those obligations. Purchase Order financing gives you the additional option to accept bulk orders without the need to push your credit to its maximum limit. Many established businesses have been successful because of this type of financing. Purchase Order financing is usually used by companies during peak seasons, a business may receive exceptionally large number of orders beyond its normal capacity. By utilizing purchase order financing, it becomes possible for a business to accommodate these orders even if they have limited cash. Read continue
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