As a small business owner, you know that there will always be times when you need a little extra money to help grow your company. While loans are always an option, they’re not ideal. The more debt you take on, the worse your business’s credit score will become, and the harder it will be to gain financing in the future. Believe it or not, loans aren’t the only option. You can get the money you need through purchase order financing. Here are some of the ways that your business will benefit from using this loan alternative.
1. You Can Take on Bigger Jobs
Big jobs mean bigger expenses for your company. You have to pay for the cost of materials, supplies, and labor upfront before your client ever pays you for the job. This makes it hard to accept work when money is tight. With PO financing, you’ll get the money you need immediately. The financing company will bill your client so you can have the cashflow upfront to take care of the job in the first place.
2. It Won’t Put You In Debt
With loans, it’s easy to get behind on payments. When this happens, many business owners have to take out additional loans to help pay what’s due on their first loan. The result is a vicious and never-ending debt cycle that takes a major toll on your business. Financing purchase orders doesn’t put you in debt with a lender.
The financing company gives you an advance on the purchase order and bills your clients for the full amount due. Once they receive the money, the financing company will charge you a fee for their services. When you pay it, you’re done. There are no ongoing loan payments to worry about or crushing debt to deal with.
3. You Won’t Have to Worry About Collections
Every once in awhile, you’ll have a client that just won’t pay on time or at all. When this happens, you’re not just out the money you need—you’re stuck chasing after the client to get them to pay you what you’re owed. This takes you away from your business and forces you to spend time contacting clients when you could be working and earning more money.
With purchase order financing, you get the money you’re owed and the financing company handles collections with your client. You won’t have to worry about chasing down money or waiting for clients to pay you long-past the deadline.
Purchase order financing is a great way to get the money you need without having to work with uptight lenders or worrying about your debt levels.