Keeping your business running even through lulls in your cash flow can mean looking for financing outside your usual means. Some business owners turn to credit while others take out loans. But, without good credit, you might struggle to get approved for these types of funding. Rather than waiting out the financial downturn, consider turning to a purchase order financing company to get you through the difficult times.

How Purchase Order Financing Works

If you don’t have the funds to pay a supplier for inventory, you could miss out on a lucrative sale. Purchase order financiers will front a portion of the cost to restock your inventory using your order as collateral. After you have successfully filled the order, pay back the financier, and you are left with the remaining profit.

This process is simple. When you get an order, send it over to the financing company, and they determine if you qualify for assistance. If approved, they will pay directly to the supplier. Once you have moved the final product to your consumer, rather than paying back the supplier, you pay the purchase order financing company.

How This Helps in the Long Run

With purchase order financing, you no longer have to turn down big contracts just because you cannot afford the inventory. This is perfect for small businesses that have recently started up. You don’t have to have good credit to qualify, and it’s not a loan, so you do not have to make monthly payments. Fees generally run from 2%-6% per transaction, but if used to cover large contracts, the return on using purchase order financing makes the cost worth it.

If your business is young and lacks the credit history to secure a loan or a line of credit, purchase order financing can help build your business even throughout difficult financial times.

If you want to know more about purchase order financing or are interested in giving it a try, reach out to Increase Lending. Don’t let your lack of funding keep you from going after big contracts!