Purchase Order Financing to Improve Cash Flow
Filling large orders is difficult for many companies, especially for small companies and startup companies, because there is rarely enough capital available to purchase the raw materials to fulfill the order. However, there is a way for businesses to secure the cash they need to deliver on the orders. This is known as purchase order financing. Here’s how it works: Companies use purchase orders to record orders from their customers. These purchase orders, in essence, create a contract between a company and their customer. It means that the customer promises to pay after the products are delivered. Because this arrangement creates a contract, it makes the purchase order valuable to companies known as factors. A factor can fund a purchase order for a company and provide them with the cash they need to produce and fulfill their order.
PO Financing For Sales Growth
PO financing is an often overlooked way to get the cash you need to grow your business. A PO, or purchase order, is a contract between your business and your customer. It signifies a promise to pay and can be used to obtain the cash you need to fulfill your orders. By financing your POs with a PO financing company, you will have the cash to fill new orders. This is why purchase order financing can deliver on sales growth and is a great option for many startup companies.