Like the water coursing through the pipes of your home or office providing the constant convenience and usefulness of water, the constant flow of cash is essential to the health and success of every business. As finance author Robert Kiyosaki said, “The most important word in the world of money is cash flow.” An excellent source of cash flow funds is purchase order financing.
What Is Purchase Order Financing?
Purchase order financing simply refers to an advance of cash against a purchase order for completed goods to provide funds for manufacturing costs. (For service businesses, a parallel approach called “invoice factoring” is often used.)
How Purchase Order Financing Increases Cash Flow
Purchase order financing can work for many goods-oriented businesses, from startups to well-established businesses. This method of financing works well in situations when the timing of available cash puts a “crunch” on business operations. The business may need capital immediately but may not have any available at that point in time. When a business enters a contract with a purchase order financing company, they provide the cash and your business can proceed to fill orders immediately.
Common Myths of Purchase Order Financing
These myths about purchase order financing are not true:
- Purchase order loans have excessive interest rates. While the rates may be somewhat higher than a traditional loan, the rates are affordable, especially when the business needs cash.
- These loans are risky. Not so. The purchase order itself is a secured asset. Once the order is filled and the purchase order is paid by the customer, the lender is paid.
- Purchase order loans are distasteful or disreputable. Not so. Today, businesses of all sizes use these loans.
- It is difficult to get purchase order financing and takes too long. In actuality, purchase order loans can be handled in a week or less and the process is simple.
Seek Expert Financing Solutions
Contact GP Solutions, LLC, based in Cheyenne, WY for quality financing solutions to help your company grow. We can help you get the capital that you need.