It’s commonly believed that purchase order financing isn’t worth the while because the orders themselves take a significant amount of time-consuming work to process. That used to be the case, and that’s why only hefty finance departments used to deal in them. Fortunately, technology has advanced in such a way that much of the purchase order process can be automated. What used to be a time-waster for small businesses has now become a very convenient way to gather much-needed funds upfront without worrying about cash flow complications.
Purchase order financing allows businesses to leverage their verified orders to gain finances right away. Even if working capital is minimal and cash flow is difficult to rely on, businesses can take on large orders by financing the orders themselves.
Once that happens, it doesn’t matter whether the customer takes the entire 90 days to pay the invoice. The funds are generally there right away, and they can be immediately invested in fulfilling the order and growing the business. The challenges of an extremely large order may be immediately dissolved, and the benefits of that order are often available to the business upfront.
Thanks to technological advances, even small businesses can finance their purchase orders without requiring their employees to work overtime. Various applications can take care of each and every step of the purchase transaction, starting from the request and ending with the receipt of the funds.
Purchase orders can offer the added benefit of making it easy for businesses and their customers to check that all the information on an order is correct, allowing budgets to be properly enforced and improving accountability. More information is generally available to both the supplier and the customers, and fraud may be significantly decreased.
It’s also much easier for businesses to plan their budgets and control their cash flow. The small fee that a business pays to receive purchase order funds upfront may be well made up for by the costs that purchase orders cut thanks to the improved efficiency.
If you’re the owner of a business that experiences cash flow problems on a regular basis, you might be a little apprehensive anytime that a customer proposes a very large order. It’s hard to turn down such a large order, but it’s also important to avoid a cash flow crisis.
Thanks to purchase order financing and the technological advancements that make it accessible to small businesses, you can eliminate this headache by getting the funding from the order right away. You may also benefit from the many ways in which purchase orders cut costs and increase accountability.