Many companies, particularly smaller ones, don’t have deep pockets when it comes to working capital. They can find themselves in a bind when new business orders come in because they don’t have the cash on hand to handle the new business. However, they would like to take on these new orders because it would enable them to grow. For many businesses, purchase order financing is the answer.
What Is Purchase Order Financing?
Purchase order financing is a funding option for businesses that need additional working capital in order to complete orders that customers have placed. It can be a particularly compelling option for smaller firms that receive sudden large orders, when there may not be enough cash on hand to pay for fulfillment.
Purchase order financing works like this:
- The business receives a large order and does not have the financial capacity to fulfill it.
- The business contacts a lender or financing agency
- The agent pays the supplier directly so that the order can be handled quickly
- The business then pays back the financing
Purchase order financing is particularly suitable for businesses that sell products that they obtain from a third party. Importers, warehouses, and resellers are examples of businesses that can benefit from purchase order financing.
Benefits of Purchase Order Financing
Purchase order financing can help your business grow in several ways:
- You can take on unusually large orders
- You can add to your client base
- You can make on-time deliveries
- You don’t have to turn away new business
Connect with Array Financial
If your business needs funding then look no further than Array Financial. We are experts in purchase order financing as well as other financial programs that you may be interested in. Give Array Financial a call today.
Leave a Comment