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Article Surfing ArchivePurchase Order Finance - Your Tool For Unlimited Sales - Articles SurfingDo you sell to the government or to large companies? Do you regularly get purchase orders that stretch your company's ability to deliver? Lastly, if you had financing to cover all your supplier costs, could you sell more? Much more? If you answered yes to any of these questions, then purchase order financing could help your business grow. Purchase order financing is a way of financing sales that has been gaining popularity with US and Canadian businesses. It offers a very simple proposition. If you have an order from a large credit worthy business (or government agency), then the financing company will provide you with the necessary funding to fulfill your supplier payments and make the sale. Call it sales based financing. It works well for resellers, distributors and wholesalers, although it can also be used in other industries. Here is how purchase order financing works. Let's say that you own a company that has been getting progressively larger orders, tightening your cash flow. After setting up a purchase order financing agreement, this is how your sales financing would work: 1. You get an order from a client As you can see, purchase order financing allows you to leverage the resources of the financing company and allows you to increase your sales. With PO financing, lack of cash flow will never be a reason to lose a sale. As opposed to a business loan from a bank, purchase order financing is very easy to obtain and can be set up in days. The main requirement is to have valid orders from good commercial or government clients. Most banks won*t offer this type of financing, but you can get it from a factoring company. As a matter of fact, purchase order financing and invoice factoring are frequently combined to help reduce the costs of the transaction. So, if your purchase orders are piling up, be sure to consider financing with purchase order funding.
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