With the economy slow to recover, many small- to-medium sized business might be less prepared to deal with adversity than prior to the recession. As a result, if the economic recovery slows down further or regulatory changes occur, wholesalers could struggle to fill orders.
When businesses enter a situation where large orders can be difficult to fill, they might miss out on game changing opportunities. However, purchase order financing could help them take advantage of larger orders when they have an inability to do so on their own.
According to the 2013 Aon Global Risk Management Survey, reported readiness for the top 10 business risks declined 7 percent when compared to 2011. The top five reported risks of 2013 are economic slowdown, regulatory changes, increasing competition, damage to reputations and failure to attract or retain top talent.
It is clear that slow economic growth remains an issue, as Gross Domestic Product only increased at an annual rate of 0.4 percent in the fourth quarter, after rising 3.1 percent in the previous three-month period.
"One possible explanation of the decline in risk readiness could be that the prolonged economic recovery has strained organizations' resources, thus hampering the abilities to mitigate many of these risks," said Stephen Cross, chairman of Aon Global Risk Consulting.
Should companies continue to see resources tied up, it could be difficult to take advantage of a game changing order that might come from a big box retailer. Wholesalers that are in this type of situation should consider purchase order financing.
This type of lending agreement allows a company to obtain 100 percent of the funds needed to fill an order. In certain situations, businesses are forced to sell off a percentage of their company in order to have the financial means to fill such an order, but that doesn't have to be the case.