Many small- and medium-sized businesses have an occasional need for additional funding for their operations. One type that may be of interest is purchase order financing.

Purchase Order Financing in a Nutshell

Simply put, purchase order financing is a financing option for businesses that need funds to ensure that customer orders are fulfilled. Especially in the case of smaller businesses, when large orders come in there may not be enough working capital on hand to pay for the purchase and shipment of the goods. When your business utilizes purchase order financing, this potential problem is entirely sidestepped. In fact, purchase order financing enable fulfillment even before an invoice is even sent.

It is important to remember that purchase order financing is not the same as taking out a loan. This type of financing does not have to be paid back. That’s because the financing agent is paid when you transfer the purchase orders to them.

Businesses Suitable for Purchase Order Financing

Purchase order financing is particularly useful for those businesses such as resellers, B2B outfits, or warehousers that sell finished products obtained from original or primary sources.

Not all businesses fit into this category and for them, other types of financing may be preferable. Alternative to Purchase Order Financing

Alternatives to purchase order financing are available and can be a better bet for certain business models. Other financing types include traditional loans, lines of credit, accounts receivable factoring, merchant cash advances, and other types of alternative financing.

Connect with Rustwood Capital

Here at Rustwood Capital, we are in business to help other businesses succeed. Give us a call today should you have an interest in learning more about purchase order financing or other forms of financing that are perfect for your business model.