What are the benefits of purchase order financing?

Small- to-medium sized wholesalers and manufacturers generate sales by selling product to businesses. Depending on how much capital or credit it has, a company can fill a certain size of orders. But what happens when a wholesaler has a lack of funds and receives an order much larger than it usually fills? One option is purchase order financing.

In contrast to securing financing from a bank, qualifying for purchase order financing is often quick and easy.

  • Fill large orders – Without purchase order financing, a wholesaler or manufacturer that receives an order that is larger than it normally handles could find themselves losing out on an opportunity to grow their business. When a lender gives the business a line of credit to cover supplier costs for a confirmed order, purchase order financing allows a wholesaler or manufacturer to meet this demand.
  • Avoid selling part of the business – In some cases, wholesalers and manufacturers are forced to seek out additional investors and sell off part of their businesses in order to fill a large order. Million-dollar orders can be a game-changer for many companies, so oftentimes, they don't have any other choice but to sell a share of their business so that they are able to capitalize on the growth opportunity. However, this is avoidable with purchase order financing. This type of lending allows a wholesaler or manufacturer to cover 100 percent of the costs needed to buy finished goods without having to give up any part of the business.
  • Quick approval – Time is money for manufacturers and wholesalers. Luckily, lines of credit through purchase order financing are easier to qualify for and are approved and deployed in days.

Any small-to-medium-sized wholesalers or manufacturers that need to fill large orders and want to expand could greatly benefit from purchase order financing when a bank says "No."