If you’re like most, the idea of obtaining financing for your purchase orders may be a relatively new idea to you. Most would think to go to a bank or another traditional lender when immediate business capital is needed because not enough capital is being generated through their operations. The benefit of PO funding is that your company is able to secure that capital without having to take a hit to your business credit profile.
Yet it’s important to remember that not all purchase orders are created equal. Some could potentially present a great deal of risk when it comes to invoicing and collections. Knowing the different levels of purchase orders will helps you better comprehend the benefit that a factor can provide.
Different Services = Different Risks
Purchase orders themselves can typically be broken down into three categories:
- Distribution: These are those supplies for which you act as the distributor or wholesaler to your clients.
- Repackaging: Covered under this category are supplies coming from an outside distributor for which you perform quality controls or re-servicing before sending on.
- Manufacturing: These are for products that you manufacture in-house and go directly to your customers.
Both you and your factoring company assume risk when you engage in purchase order financing. When you have the backing of an established brand name behind your products, that risk is viewed to be less. For those products which you manufacture or for which you are directly involved in the supply chain, your factor may choose to take a closer look at your experience in providing these services before assuming the risk of these transactions.
Once you’ve proven your repackaging and manufacturing po’s are worth the risk, Universal Funding can begin the process of working with your existing clientele in securing your repayment. As the funding source has an equal stake in the risk that clients won’t pay, they may also assist you when taking on new customers by checking their credit to see if they’ll be able to meet the financial obligations that come with your goods or services.
Waiting to Work with You
If the invoices in your accounts receivables qualify you for PO funding, we here at Universal Funding would be happy to provide you with this service. We specialize in finding innovative ways to help you meet the financial needs of your business. If you’re interested in learning more about what our factoring and purchase order financing program has to offer your company, simply fill out our convenient online rate form.