Improved economic outlook a good sign for purchase order financing market

Although some experts feared the combination of the fiscal cliff and the sequester would do a number on the economy this year, there has actually been some improvement. 

With growth expected in the fourth quarter, small- and medium-sized manufacturers and wholesalers could begin to see additional business. As a result, demand for purchase order financing could rise as well.

As the fiscal drag continues to wane and household wealth rises, the final three months of the year are expected to be strong for the economy, driven largely by consumers, according to Fannie Mae's Economic & Strategic Group. 

"On the bright side, consumer spending appears to be improving from the tepid pace seen at the beginning of this quarter," said Doug Duncan, chief economist at Fannie Mae. "Although Americans may continue to exercise caution, real consumer spending growth should improve modestly to slightly over 2 percent in the current quarter."

Another positive sign for the economy is the strong stock market. According to USA Today, both the Standard & Poor's 500 and Dow industrials rose to all-time highs on September 18, with the Federal Reserve announcing it would continue its bond-buying program.

Should strong economic growth translate into larger orders for small- and medium-sized manufacturers and wholesalers, purchase order financing may be needed. To handle this additional business, some sort of funding may be needed, and it may not be available through a bank for a variety of reasons – limited available capital, poor credit, etc.

Fortunately, purchase order financing is available, which provides businesses with up to 100 percent of the funds needed to fill an order. This allows owners of these companies to retain full equity when taking on orders from larger firms.