Small Business Owner’s Handbook: Purchase Order Financing

Purchase order financing is a form of alternative financing in which a business can have needed supplies paid for and transported right to its doors by a financing company, so that those supplies can be used to assemble products which have been ordered by a customer. Sometimes very large orders placed by a customer simply cannot be accommodated with cash on hand or through borrowing from a conventional lender.

With the help of a financing company, such large orders can be handled, and your company can increase its reputation by fulfilling large-volume orders. Purchase order financing occurs before you have delivered goods to your customers, and before you have invoiced them for those goods, making it distinctly different than an arrangement like invoice factoring, for instance.

Which types of companies would use purchase order financing?

There are several situations which might call for purchase order financing by companies of various sizes. Companies which consistently experience cash flow gaps at the same time every month would benefit by using purchase order financing, so that suppliers could be paid by the financing company rather than from incoming revenues, which would not be available at the gap time.

Those companies which experience anticipated increased sales during special seasons of the year might also benefit by using purchase order factoring, since an increased volume of supplies would be needed to handle greater demand during those times. However, one of the most beneficial uses for purchase order financing is for a company which is trying to increase its credibility and reputation in the market place by competently fulfilling larger orders, such that the next higher business level becomes achievable.

PO Financing with Grey Hill Capital

Purchase order financing can be your ticket to enhanced credibility in your marketplace, and can be a powerful first step toward real business growth. To get started with PO Financing, contact us at Grey Hill Capital, and let us help you toward that next higher level of business success.

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