When trying to grow your business, cash flow can often be an issue. As the size of incoming orders increases, small business owners can find themselves struggling to cover the cost of the goods to fill those larger orders. Unfortunately, this can result in pushing back delivery dates until the goods can be purchased. In some cases, orders are even turned away. Unfilled or late orders, hurt your bottom line, damage your company’s reputation, and discourage future business. Nothing is more frustrating than finally getting that big order that will take your business to the next level and not being able to fill it. Purchase order funding for small businesses can ensure that none of your orders go unfilled and are delivered on time. Ready to learn more?
Purchase Order Funding 101
You’ve finally landed that big order you’ve been waiting for. When you contact your supplier to order the goods and request an invoice, you realize that purchasing those goods will wipe out your working capital, leaving you unable to cover your daily operating expenses. You need to keep the lights on and meet payroll expenses to keep your business open. On top of that, your customer won’t agree to delay delivery, so there’s no time to wait for an influx of cash from accounts receivable or apply for a traditional business loan. That’s where purchase order funding for small business comes in.
When applying for funding, you would submit your supplier’s invoice along with your application to the purchase order financing company. Once your application is approved, the financing company would pay your supplier either all or most of the invoice. Most companies that offer purchase order financing don’t pay the entire invoice. The average is 80-90% percent, leaving you, the business owner, responsible for the balance. This small percentage is much more manageable, enabling you to fill the order and cover your daily operating expenses. Your customer pays the financing company directly once the order is filled. The company then forwards the payment to you minus their fee.
Benefits Beyond Working Capital
Now that you know how purchase order funding for small business works, it’s important to understand the benefits it provides. The first, of course, is getting the goods you need to fill your order and grow your business, but there are other benefits that set it apart from traditional business loans. Keep in mind, benefits and terms will vary depending on the purchase order provider.
Avoid Additional Debt
When you take out a loan you, add additional debt to your balance sheet. With purchase order funding for small business, you are just receiving an advance on money that will be owed to you for filling the order. The application process is much simpler than applying for a traditional bank loan. Best of all, you avoid taking on long term debt.
Less Than Perfect Credit
It’s not uncommon for a small business owner to have a credit issue. Whether you have a short credit history or less than perfect credit, you can still qualify for purchase order funding. Purchase order financing companies aren’t as concerned with your credit history as they are with your customer’s creditworthiness because that’s who they’ll be receiving payment from. You don’t have to have stellar credit to leverage purchase order funding to take on larger orders and grow your business.
Purchase Order Funding for Small Business
At CFG Merchant Solutions, we believe purchase order funding for small business, as well as our other financing options, is a great way to promote business growth. We will guide you in choosing the perfect solution for your individual business needs. We are not bankers or middlemen. We are direct funders that care about your business. We are entrepreneurs ourselves and have experienced first-hand the frustration in acquiring flexible and timely financing. CFGMS uses proprietary analytics and technology, along with good, old fashioned common sense underwriting to provide fast and efficient access to capital