My husband came home from work one afternoon with what seemed to be a great way to earn a little extra money. Unfortunately, we didn't have the money on hand that it would cost us to get things started. I decided to start looking for a loan to cover the cost of starting the small business. There are so many options for borrowing money to start up a business and it took me quite a while to narrow down the long list. My blog contains the best options for you to consider when looking for financing to open a business of your own.
Cash flow is king. Without smooth, regular cash flow, your business cannot operate. This is especially true for small businesses. You cannot accept large jobs that take up all your resources but, due to red tape, slow processing, and other issues, won't pay you for months on end. You may have a net 30 on all invoices, but some big accounts just ignore it. They pay you on their schedule, even if it is net 120 or more.
Your bills are due now. You can't tell the bank that they have to wait. You can't pay the electric bill with a purchase order. So, what's a small business to do? You need the cash flow to pay your team, your suppliers, and your own mortgage. There is a solution: PO financing.
What is PO Financing?
PO financing, also known as purchase order financing, helps businesses cover the costs of materials and labor needed to fulfill a purchase order, which can be a lifesaver for businesses that don't have the cash on hand to cover these costs upfront and can't afford to wait months for payment.
How Does PO Financing Work?
The first step in getting PO financing is to find a lender that offers this type of financing. Once you've found a lender, you'll need to apply. The application will ask for information about your business, including your financial history and the purchase order you're looking to finance. If approved, the lender will provide you with the funds you need to cover the costs associated with your purchase order.
What Are the Benefits of PO Financing?
One of the benefits of PO financing is that it can help you free up working capital, meaning you won't have to use your own money to finance the purchase order. Additionally, PO financing can help you take on larger orders than you would be able to without this type of financing, leading to increased sales and profits for your business.
While there are costs associated with PO financing, it is simply a cost of doing business and much preferable to the waiting game of invoice payment.
If you're a business owner who is looking for a way to finance a purchase order, then PO financing may be a good option for you. To learn more about how PO financing can work for your small business, speak with a financial advisor or loan officer today.
Share22 November 2022
