What You Don’t Know about Purchase Order Financing

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Purchase order financing is often thought of as little more than a shortcut for small companies looking to expand rapidly in order to achieve a more favorable market position. Most business owners think purchase order financing is only a viable option for small companies without the cash-on-hand to pay for the supplies and infrastructure they need. Yet purchase order financing is available, and a good idea, for any company looking to complete an essential order they can’t afford within the boundaries of their current financial position.

You see, purchase order financing plays a very important role in the business world, a role which doesn’t always have anything to do with assisting small, cash-strapped businesses. Purchase order financing provides a viable option for companies with bad credit who aren’t able to receive a traditional loan or extension from their bank. A bank may turn down a company’s request for a larger loan for a number of reasons, even if that company is well established. Sometimes a bank will no longer provide any extra credit to a company who already finds itself heavily indebted; other times a bank simply won’t provide enough extra credit to a debt-laden company to complete a necessary order.

Even companies who restructure their debt in order to improve their cash flow occasionally find themselves unable to borrow the additional money they need to complete their essential orders. In these situations purchase order financing will provide those companies with the ability to buy what they need through less conventional channels and on increasingly favorable terms.