Paragon Financial Group is funding during the COVID-19 crisis.

Purchase Order Funding: A Tool to Help Your Business Grow With Out Loans or Debt

Purchase order funding (PO funding) can be a powerful tool for businesses. This sort of financing enables companies to generate money for growth without having to apply for a loan or take on new debt. The first thing that many businesses do when they encounter a cash flow problem is to attempt to take out a bank loan. Sometimes, this is an option, other times it is not. If a business does not have excellent credit or has not been operating for a certain amount of time, then they will find it very difficult to obtain a loan. Thankfully, this is not the end of the matter. PO funding makes it possible for just about any company that has clients with good credit, to get money without going into debt.

The purchase order funding process is a relatively simple one. After a company has gone through it once, it gets much more accessible. The speed and ease in which a business can acquire funds make purchase order financing ideal for businesses that need to come up with money quickly. The process can allow companies to generate cash in only 24 hours. A business would be hard-pressed to come up with an alternative source of cash without paying heavily for the privilege.

In a purchase order funding deal, a factor will purchase or issue a letter of credit for whatever materials a company needs but isn’t able to afford or do not want to pay for with their own money. PO financing often involves the purchase of raw materials necessary to manufacture a product to sell to individuals or other businesses. These materials (or products) will be shipped to the company working with the factor. They will then manufacture the product and send it to the customer. The factor receives the payment after the products have been sold. The best thing about this arrangement is that it can be done without a company having to take on any new debt.

This type of financing enables companies to fulfill orders that they may not have been able to afford on their own. As a result, they don‘t have to turn down large orders which could potentially provide them with badly needed money or that could help take their business to the next level. In today’s economy, it would be unwise to turn down any business a company can generate.

Today, it is tough to get a loan and perhaps even more robust to pay back whatever loan a business can get, due to the sluggish economy. However, in order to continue to do business, cash is a necessity. For companies that sell physical goods, purchase order financing is a great option.

Choosing the right factoring company to work with is extremely essential. Partnering with the wrong type of factor can be very expensive for a business. Therefore, it is vital that any business looking to use this type of financing, take their time and investigate thoroughly all companies they are considering working with. Time is better spent being careful. Choose the right factor then unraveling a messy and potentially expensive situation.

Want to learn more about PO Financing?

Apply Securely, call 888-400-5931 ext 1 or email us.

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