Purchase Order Financing is a non-traditional form of business financing that has been gaining traction in recent years. It is becoming one of the best means for a small business to get a business loan and business credit in the current economic climate. A P.O. Financing company like ours helps businesses by offering to guarantee their purchase orders from a buyer that is committed to purchasing a product from the company.
Banks offer lower rates when lending money to businesses, but that option is not always available, especially since the Global Financial Crisis. Even if your business has seen its credit rating cut in recent years, a purchase order lender will often still be able to give you financing. That’s because in P.O. Finance deals, the lender evaluates the credit rating of your customer as well as your company. If the customer has a track record as a reliable and prompt payer then the lender will often be willing to finance your transaction.
In order to qualify for P.O. Financing, you need to prove that you are able to complete the work required, which is easy if you have experience in building your product. Your customer must be financially capable of paying their bill or at least be protected by some form of financial guarantee. You also should be paid within 30 to 90 days as purchase order financing is not ideal for longer-term contracts.
The transaction structure for P.O. Financing is simple:
1. You provide the non-cancellable P.O. to the lending company
2. The lending company pays you the cash needed to complete your build
3. You invoice the client
4. The client pays the invoice and the PO Financing is settled prior to delivery
Purchase Order Financing is an attractive option that can keep your business growing when you need it most. Global Leasing & Finance Group helping your business finance your business!
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