Purcahse Order Financing - A Tool to Finance Your Growing Orders

Every business owner is looking for ways to finance their business growth. You may know that you can use purchase order financing as a tool to finance your growing orders, but there are many other tools out there that you may not know about. In this blog post, we'll cover some of the lesser known methods businesses can use to fund their growth.

- Purchase Order Financing: This type of financing uses your company's outstanding receivables as collateral and can be done in a matter of hours when the right conditions are met by the lender and borrower. These types of lenders will work with any type of business and will finance accounts receivable up to 90%. This is the fastest way to secure funding for your business growth.

- Asset Based Lending: In order to qualify you need sufficient assets such as inventory, buildings, machinery, vehicles and equipment. Asset based loans typically have a lower interest rate than vendor financing. The lender looks at the asset value and will use it as collateral. The collateral must be above minimum value in order to qualify for this type of funding.

- Factoring: Factoring is when a company sells their accounts receivable in order to get cash now. A business can factor all or part of their accounts payable for cash today. It is important for the business owner to negotiate with factoring companies that are approved by the credit bureaus. Not all Factoring companies will report to the credit bureaus, so you may want to check your credit score before you sign a contract. You should also know that Factoring accounts for about 10% of sales for most businesses and it is usually not worth it unless your accounts receivable are above $1M per year.

- Bank Financing: Banks can provide merchant cash advances in order to fund growth and working capital needs. The funds can be used to finance new business initiatives, restock inventory and take advantage of unanticipated opportunities and they can also be used in conjunction with vendor financing or purchase order financing. The loan is collateralized by your company's future sales and can be used in addition to previously discussed methods of financing. This type of financing comes with a large amount of paperwork and is more involved than other options, but it can be a good fit for small businesses that are just starting out.

Is There A Perfect Tool?

No business owner wants to focus on their numbers too much, but it's very important to know that everything you do as a business owner has an impact on your company's cash flow. It's important to have some type of financing in place in case your business needs to grow at a faster rate than what you expected. You will want to determine the best tools for your business so that you are prepared and can get the growth capital you need as soon as possible.

If your business is looking for financing, it doesn't hurt to look into all of your options. Get started today by visiting the Merchant Advance website.

For more information on Money & Capital Funding as well as most other types of Financing Programs, take a look at our website.

This article was originally published in the July 2015 issue of Small Business Trends. Subscribe.

Title: Are You Financially Ready For Your Business to Grow?

Subtitle: Take this short quiz and find out!

Is your business ready for growth? For most businesses, growth is a great thing. However, it can also be a problem if you aren't ready for it. In this article we'll cover some of the indicators that your business is financially prepared for growth.

Are you going to grow organically or through acquisition? Before you go out and start looking for businesses to buy, take inventory of all of the financial resources your business has at its disposal. Do you have enough cash in the bank? Are you able to take on the debt to fund your next acquisition? It's a good idea to address these questions before you go out on the lookout for your next acquisition. It'll save you a lot of time and trouble if you make sure that your business is in good shape before trying to acquire new businesses.

Have you already tapped into all of your financing sources? Most small business owners don't know where else they could be getting financing from. However, there are alternative methods of financing that are available if you know where to look. You may want to consider alternative methods of financing if conventional bank lending isn't an option or doesn't meet your needs.

Are you looking to grow, but don't have the right personnel in place? One of the biggest issues most businesses have when they are trying to grow is finding qualified employees. It can be a challenge to find employees that are able to take on more responsibility or position your business for growth. If you aren't able to find the right people for your business, you may want to consider outsourcing some of your operations or getting temporary help if possible until you can get the right person on staff.

Are you aware of all of the risks involved with growth? Before you go out and start growing your business, make sure that you are aware of all of risk factors involved with it. Once you start growing, you may find that your risk profile will be different than it was before. You might need to increase the number of insurance policies that you have in place just so you can stay in the black. It's a good idea to be aware of all of your options before any type of growth happens with your business.

Have you thought about buyers who could help you out? Most business owners are focused on themselves when it comes to finding buyers for their businesses.

Conclusion (Conclusion)

However, there are other business owners that you should consider as well. Before you list your business for sale, start networking with other businesses who are in similar industries and see if any of those businesses would be interested in buying your company. They might not be in the best position to buy your business, but they can definitely make introductions for you.

Get Started Today with Your Growth Plan We’re here to help! If you need a growth plan that will allow you to grow without taking on debt or risking the future success of your existing business, then contact us today. We offer financing plans and growth strategies that can help your business grow without putting your profits or financial condition at risk.