Advantages of Purchase Order Funding

Purchase Order Funding

Advantages and Disadvantages of Purchase Order Financing

In recent years, purchase order financing has been gaining popularity as a way to finance a company that has received a large purchase order. It can be a great solution for companies that need financing to fulfill a large purchase order. PO financing:

  1. Is designed specifically to help wholesalers and distributors who resell products to commercial customers
  2. Is used by companies who need funds to pay suppliers
  3. Helps companies grow past their financial limitations

For more information, please read “how PO financing works“, or watch this video.

Here are the most common advantages and disadvantages of purchase order financing:

Advantages

  1. It’s much easier to get than bank financing
  2. It can be set up quickly
  3. The line can grow with your revenues
  4. It’s available to small companies (and start ups, in some cases)
  5. The size of the line is limited only by the capabilities of your suppliers, the credit quality of your customers, and your ability to execute orders

Disadvantages

  1. It only helps companies that resell finished goods that don’t require assembly, installation, or customization
  2. It only covers direct supplier expenses
  3. It only works in transactions that have a gross margins of 25% or more (with exceptions)

Need purchase order financing?

We are a leading purchase order finance company and can provide competitive terms. If you would like more information, get an online quote or call us at 800-560-2601.

From (http://www.comcapfactoring.com/blog/advantages-and-disadvantages-of-purchase-order-financing/)