This may sound like a strange question, but have you taken everything into consideration when it comes to your customers with regard to prompt payment?
This may sound like a strange question, but have you taken everything into consideration when it comes to your customers with regard to prompt payment?
Topics: Cash Flow, About Invoice Factoring, Purchase Order Financing
So what is purchase order financing and how does it differ from invoice factoring? Both are viable solutions for when sales growth exceeds working capital but each option has slightly different ways to benefit your business.
PO funding is an excellent answer as a short-term financing option if you meet the necessary criteria to qualify. It enables companies to pay suppliers immediately, rather than using cash reserves. Sometimes factors such as seasonality or large unexpected orders will put a strain on the company cash flow and therefore the ability to fulfill valuable potential sales. Without easy access to readily accessible working capital your business risks losing orders from customers.
So how does this differ from invoice factoring? In order to factor you must have created an invoice and provided proof of delivery of any goods or services prior to receiving an advance on your accounts receivables. This is a great way to receive a cash advance on your invoices that would not normally be paid for a further 60 – 90 days. However, if that unexpected order comes in, it may be worth considering purchase order funding as another possible option to fund the purchase of goods to be re-sold to your customer prior to delivery.
Topics: Alternative Financing, About Invoice Factoring, Purchase Order Financing
Building upon recent posts concerning cash flow, it seems that many companies are still taking longer than ever to pay their invoices. This is a dilemma for small businesses waiting on invoice payment to effectively cover operating costs.
Even though the economy is slowly recovering, many large corporations are still pushing smaller suppliers into long payment cycles of up to 90 days, threatening to back out of deals or find new sources if their demand for a 90 day payment cycle is not accepted. This can simply not be viable for some small businesses that do not have the sway to delay payment to their suppliers.
Before we launch into the benefits of factoring your accounts receivables, let’s revisit a few ideas that may help the payment process along.
Topics: About Invoice Factoring, Purchase Order Financing, Financing Government Contractors
How can I fulfill my large orders when cash flow is tight?
The dilemma for many manufacturers is the lack of available cash flow to buy raw materials in order to complete large orders. It is also an issue for distributors or wholesalers lacking funds to pay manufacturers to produce goods.
Lack of available funds can mean losing valuable business you know you are capable of completing. It could also seriously jeopardize future orders with existing customers. Purchase order funding and invoice factoring can both be alternative financing options worth considering.
So what is the difference?
Topics: Alternative Financing, Cash Flow Solution, About Invoice Factoring, Purchase Order Financing, Financing Government Contractors
