Stress Free Purchase Order Financing 3/16/2022
Receiving the first large purchase order from a major retailer can be an amazing milestone for a business. Financing the production of goods to fill those orders will usually require outside support from a finance company. Purchase order financing is one of the most widely used financing tools to help cover the costs of filling purchase orders.
There is a good chance that your growth plans include selling wholesale to major retailers and other big buyers. Often, the financing of the needed inventory is an afterthought. Since you probably don’t want to get stuck without being able to fill your orders, it’s important to start exploring your options in advance.
What is Purchase Order Financing?
Purchase Order Financing is a financing tool that is used by companies of all sizes to help cover the costs of producing or acquiring goods for resale. A finance company will cover the costs to produce pre-sold goods. This allows you to commit to larger orders from customers, knowing that you will be able to deliver on time every time.
Unlike other types of financing that require a certain volume of past sales, or a strong balance sheet, Purchase Order Financing relies on the credit worthiness of the customer buying the goods. Most growing brands don’t qualify for significant capital to fill large orders. Looking at the customers’ ability to repay you for the products after they are delivered allows a po funding company to offer large amounts of capital to newer businesses. By looking at the customer’s credit worthiness we can feel confident that the inventory will be paid for on time by the customer.
How Does Purchase Order Funding Benefit My Company?
When a company has an order that is larger than their typical sale, or multiple purchase orders coming in at the same time, purchase order financing helps bridge the working capital gap from producing products to getting paid by customers.
There are many ways to secure financing for a business including asset-based loans, credit cards, and merchant cash advances. Depending on the cashflow needs to fill a certain order, any of the business financing products can help. However, they are often limited by your cash flow, time in business, and business or personal credit rating.
Purchase order funding relies solely on the credit worthiness of your end customer. This makes it possible for a young and growing business to finance large orders without worrying about how it may affect operations of the business. Since a finance company will help pay for inventory, and the repayment coincides with the repayment by your customer there is little to no stress on current cashflow.
What Are the Benefits of Working with Star Funding?
Star Funding is one of the largest and oldest purchase order financing companies in the US today. With over 20 years of experience, STAR can efficiently handle your purchase order financing needs of all sizes.
- No need to worry about where the money is coming from to fill large purchase orders.
- One time set up process and Star can finance all or some of your purchase orders moving forward.
- Finance orders as large as $10,000,000 or as small as $50,000 with the same program.
- Combined factoring and purchase order financing under the same roof simplifies the funding process and provides a significant cost savings for the brand.
Editor's note: This article is sponsored content