Purchase Order Financing: How it Helps Your Company

PO financing is a financing strategy which is often used by companies which are in need of funding, for the purpose of fulfilling either multiple customer orders, or possibly for one very large order. The way this alternative lending strategy works is that a financing company would directly pay your supplier for materials needed, so that your company can then build the required goods.

If you had to pay for these materials yourself, you might not even be able to accept the customer order which requires the materials. Once the completed goods have been produced and sold to your customers, the financing company would receive back its original investment, along with whatever financing fee it charges.

Advantages of PO financing

There are several advantages of PO financing that make it an attractive funding option for small business trying to grow. In the first place, there is never any loan involved, so your business will not be required to make any monthly payments to the alternative lender, and you never become indebted. Since your suppliers are directly paid, you don’t have to worry about trying to generate the cash yourself to pay for materials needed to build product.

This will allow you to take on more orders and larger orders, that you were perhaps unable to accommodate in the past. When other customers see that you are capable of handling these larger orders, it can result in an increase in credibility for your company, and it can elevate your standing among competitors. This can be an ideal scenario for promoting the growth of your small business, because it will attract opportunities which you might never have had, if you were forced to accept only smaller orders, or a low volume of orders at any one time.

PO financing with Flex Capital

Purchase order financing can help gain credibility for your company, as you take on bigger and bigger customer orders. If you would like your company to benefit from the advantages of PO financing, contact us at Flex Capital with any inquiries you might have, or to start the process.