COVID-19 has been stressful and challenging on many levels. In addition to health concerns, the economy has suffered greatly with many jobs lost and businesses shutting down or filing bankruptcy. With the slowdown in many industries and traditional lenders’ underwriting process becoming more stringent, many business owners have discovered the benefits of alternative financing such as invoice financing and purchase order financing.
Traditionally, importers and distributors of consumer goods & supplies selling to retailers were most often using purchase order financing to grow their businesses. In the new landscape, many retailers are requiring longer payment terms which only increases the need for companies selling to them to obtain short-term funding such as purchase order financing and accounts receivable factoring.
Businesses that work with suppliers are in an especially challenging position because many suppliers are also feeling the effect of the slow-down and are unable to extend payment terms to their customers. Purchase order financing is a possible solution that can help bridge the gap between needing to pay for goods when the supplier ships them and when your customer pays you.
What is Purchase Order Financing?
Purchase order financing, also known as purchase order funding, is a type of financing that helps companies purchase products and finished goods from their supplier for the purpose of resale. There are several advantages to this arrangement, especially during this time of economic uncertainty due to Covid-19.
- It helps companies fulfill orders even when they lack the capital to do it on their own.
- Your supplier can get paid upon shipment of goods
- You balance your cash flow during an economic downturn so you can meet your obligations.
- The entire process is handled online. There’s no need to apply in person.
- Purchase order funding is an option for businesses that don’t qualify for traditional funding.
Who is Eligible for This Type of Financing?
If your business is part of a supply chain and is experiencing cash flow challenges, purchase order financing might be a viable option for you. You will need to have a purchase order from a credit worthy customer, this shows that the goods you are purchasing are “pre-sold”. Additionally, you must be purchasing the pre-sold, finished goods from a supplier, they can be international or domestic. Importers, wholesalers and distributors selling to retailers, government, municipalities, and schools are a good fit for PO financing.
Purchase Order Funding Can Help Businesses Impacted by COVID
The COVID-19 situation began in early 2020 and is still an unpredictable situation. Lockdowns and other measures may continue well into the future. This uncertainty puts a great deal of pressure on businesses.
Wholesalers whose cash flow has been impacted due to a pause in business over the past few months because of business shut-downs can get funding for purchase orders which can help offset some of this uncertainty and get your supplier paid immediately when goods are completed and ready to ship.
Get Purchase Order Financing Through Riviera Finance
If you are a business seeking creative and flexible forms of financing, including invoice factoring or purchase order financing, it’s best to work with an experienced and trustworthy company. Riviera Finance has been helping businesses of all types with financing for 50 years. Riviera Finance offers PO Financing to clients through our affiliate, International Trade Finance.
To learn more, contact us for invoice factoring or purchase order financing from Riviera Finance.