Many business owners stress over the seemingly never-ending journey to get new customers, but sometimes, new business can actually present more challenges than expected. This is especially true when a customer places an order so big that it creates cash flow challenges. The business owner obviously wants to fulfill the order and get another happy customer, but what happens if they don’t have the cash needed to do so?
One option they have is purchase order financing, or PO financing. This solution allows them to pay for the necessary supplies without taking out a loan. Despite how helpful it can be to growing a business, there’s still some confusion on how exactly PO financing works for many people, but this guide will help you understand what it is and how it can benefit your company.
What is PO financing?
If a small business receives an order they can’t fulfill due to cash flow issues, they can turn to a purchase order financing provider. Essentially, the provider will front the money so the business owner can pay their supplier to fulfill the order.
Once the customer pays for the order, the financer will take a percentage and pay the business owner the rest of their money. It’s an excellent way for small business owners to ensure they can always serve their customers without taking out any loans to fulfill large orders, and taking advantage of this service comes with numerous benefits.
Benefits of PO financing
Receive cash regardless of credit
Getting the capital needed to get a new business up and running is a common problem. Not everyone can fund their new venture themselves, so they’re forced to turn to a business loan to pay for supplies. However, this isn’t always an option for new businesses that don’t have an established line of credit. PO financing allows them to bypass this issue, though.
Since they are receiving cash based on an existing purchase order, they don’t need to worry about taking out any loans and adding debt to their bottom line. Instead, they receive the cash they need to fulfill a large order and pay the financer a small percentage once payments are received.
Never have to turn down a customer
Being a reliable provider is invaluable for a small business. It helps retain customers and bolster its reputation, but that’s not possible if the company doesn’t have the funds necessary to complete a large order. PO financing is an ideal solution to this problem.
Rather than telling a potential client they can’t complete the request, they can partner with a purchase order financing company. That way, they’ll receive the funds necessary to complete the order without having to take on any new debt.
Opens up new business opportunities
Knowing that they can fulfill an order of any size opens up the possibility for new opportunities for new businesses. Rather than focusing solely on smaller orders that are viable with their current cash flow, business owners can start going after more prominent clients.
Even if they receive a large order that would otherwise be impossible to fulfill due to budgetary constraints, this type of financing means they can deliver on their promise regardless of the size of the order.
Are you ready to take advantage of PO financing?
NTIB Finance & Consulting is ready to help you grow your business with our purchase order financing services. As one of the premier business operations and financial consulting companies in New York, we specialize in helping businesses nationwide find affordable debt capital. You can learn more about our financing options online, or schedule your free consultation today to get started.