Underscoring the Differences in Purchase Order Financing

Given the financial turmoil being experienced across the globe, many of our small and medium sized businesses are being hurt by the resulting current credit crunch. Whether you are an established brick and mortar company, new entreprenuer, or online business, capital is essential for growing your business. Fortunately, there are financing options for those who have proven themselves to be successful, but need outside money to complete larger and larger orders from their clients.

To surpass their capital limitations, many local businesses and ecommerce companies are looking into the benefits of purchase order financing. As opposed to getting an unsecured loan with high interest rates, PO financing offers a much more efficient solution. It is a short term assistance that facilitates your company’s huge orders by making payments to your for suppliers, laborers, and intermediaries to allow your business to deliver larger client orders than otherwise possible. A PO financing company offers cash strapped businesses an equal opportunity to battle it out among the big league corporations in the hopes of expanding their company.

Purchase order financing is the answer to the most basic dilemmas faced by most entrepreneurs and as such they have been modified into three different types to meet the varying needs of many businesses.

Government Financing

Doing business with the government are in high demand right now as it brings in the money through huge and multiple orders. But dealing with the government is not easy. Not only do they require large sums of working capital, they are also oftentimes more complicated than regular clients though the amount of business you get from them makes all the hard work worth it.

Through government PO funding, smaller businesses are able to take on government contracts and increase their company’s potential for profits while boosting their chances of securing a steady stream of business from the government sector. It is an effective way for entrepreneurs to generate the funding they need to push through with their contracts without worrying about the money.

Finished Goods Finance

In this kind of transaction, a PO provider will act as the intermediary between the company and the supplier. By making the necessary funding, they will ensure that the finished goods are delivered to your clients freeing you from the responsibility of having to take on the costs involved until you have been completely paid by your client.

Non-finished Goods PO Financing

This business transaction is much more complicated than that of the finished goods financing as it involves raw or semi-finished materials. In this type of financing, you will need to convince the PO providers that you are capable of manufacturing and delivering the products to your end customers before an agreement between you and your PO financier can be made.