Purchase Order Funding: Increase Cash Flow

Purchase Order Funding: Increase Cash Flow

Many businesses are routinely looking for ways to improve or increase their cash flow. One of the most obvious options that enable successful cash flow within the supply chain is otherwise known as purchase order financing. Purchase order financing is particularly useful and appealing among young startup culture and small businesses seeking to fulfill larger orders. Simply put, purchase order financing allows a company to accept additional purchase orders above and beyond what their internal cash flow can support. Essentially, purchase order financing companies assist companies to process orders and grow their customer base.

The process of purchase order funding is not as complex or as intimidating as most companies perceive it to be. Purchase order financing for businesses begin when businesses receive an order from their customers. Due to the size of the order in comparison to a growing business’ internal cash flow, that business can create a purchase order to be sent to a purchase order financing company such as TradeRiver USA, for example. Although PO funding companies differ in how they provide support, their value added is in paying the suppliers. 

Purchase order financing is a commonly overlooked practice to increase cash flow and boost sales growth. A purchase order indicates a promise to complete a  payment and can be used to obtain the cash that a business needs to fulfill their customer’s orders. This transaction appeases customers and customer expectations and also provides breathing room for a company to operate at the level that it wants to. What does this mean? By financing a company's purchase orders via their purchase order funding company, an organization will have the cash flow to take on and complete new orders. A company can expand, even into international waters and prioritize sales growth with the help of international purchase order financing. For businesses that are growing or are looking to grow, purchase order financing is a great option for growth.  

Purchase order funding is a very valuable tool that oftentimes seems overrated due to an organization’s inability to anticipate large orders coming down the pipeline. The mere truth is that demand for products and services will inevitably grow at exponential rates before a company knows it. Companies that are just starting out generally do not have the cash, raw materials, or collateral to maintain the pace of sales orders. Purchase Order Funding Companies provide businesses with the necessary capital to pay suppliers for their purchases on schedule and maintain transactional operations. Purchase Order Funding For Small Business is a short term solution, but can be utilized and applied to a multitude of orders and further serve as a foundation for a company to grow and expand from. 

Contrary to popular belief, purchase order funding can work for almost any business. Whether it is a small company just starting out or a well-established veteran company, purchase order financing presents a remedy for all internal cash flow hindrances. Purchase order financing isn’t as closely regulated as traditional loans commonly are. They do not require endless paperwork or collateral. Plainly, sometimes business owners find themselves in a bind and need cash immediately. Fortunately, local purchase order financing is always an available and feasible solution. 

What we’ve seen:

Case 1: Purchase order funding: Canada Distributor

An agriculture equipment distributor in Canada received a large order from one of their long time customers that exceeded the company’s tangible capital. As a result, the company hired a purchase order funding company to enable them to proceed with the order and pay their supplier in time to complete their customer’s request. 

Case 2: Purchase order funding: Florida Distributor

A retail wholesaler company in Florida was in need of a service to mend internal operations. Due to their lack of cash flow, the distributor was unable to fund the service. As a result, the company sought external helped and partnered with a purchase order financing company to remedy internal operations.