The Many Benefits of Purchase Order Financing

The Many Benefits of Purchase Order FinancingPurchase order financing has many great benefits, and its availability as a cash generation option has been quite helpful to many businesses. Purchase order financing is fast and doesn’t rely on a businesses’ credit history. It allows companies to raise money without taking on new debt and is an option even for new companies.

Below, we will discuss these benefits more in-depth.

Purchase order financing is easy:

For the most part, this sort of funding is reasonably straightforward. There are not a lot of hoops to jump through like there are with bank financing. As a long as a company has creditworthy customers and invoices to sell, it’s not difficult finding a Factor to work with.

Purchase order financing is fast:

Such financing is incredibly fast. It is one of the quickest ways to get cash. If a business already has an established relationship with a factoring company, they will often be able to get money within 24 hours. If it is a company’s first time working with a particular factor, then the process may take a little longer, roughly 4-7 days. This still is incredibly fast and allows companies to infuse much-needed cash into their business quickly.

Purchase order financing doesn’t rely on a company’s credit history:

Companies with average-to-poor credit histories will have a challenging time getting a loan from a bank. If they use purchase order financing, then this is not even a concern. Factors only consider the creditworthiness of a company’s clients because they will be who the Factor will be collecting money from. They don’t care about the business’ credit who owns the invoices.

Purchase order financing allows companies to raise money without debt:

Many companies are forced to go into debt to keep their business afloat, make big purchases, or to finance growth. This can be dangerous and puts a business at risk of going under if they are not able to pay back what they owe. One of the great things about PO financing is that it can generate cash without taking on new debt. The Factor subtracts their payment from the collected invoices.

Purchase order financing is available to new businesses:

New businesses will find it difficult to get a bank loan. Banks are not interested in loaning money to companies that have not been in business very long. This can put such businesses in a bind. There will likely come a time when they need money but aren’t able to secure it through traditional means, such as through a bank loan.
Often times, such companies turn to credit cards, quickly racking up expensive debt. A much better solution might be to use purchase order financing. It allows businesses to quickly raise cash without expensive debt (credit cards) and without relying on a bank.

 

 

 

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