PO Financing Companies: Unlocking Business Growth | 7 Park Avenue Financial

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YOUR COMPANY IS LOOKING AT PO (PURCHASE ORDER) AND INVENTORY FINANCING!  

How PO Financing Companies Transform Cash Flow Management

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing business today

                              ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

                             EMAIL - sprokop@7parkavenuefinancial.com 

"PO financing companies provide crucial financial solutions that empower businesses to fulfill large purchase orders and manage cash flow effectively."

"Struggling with cash flow? Discover how PO financing can unlock your business's potential!"

7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer  PURCHASE ORDER FINANCING & solutions that solve the issue of cash flow and working capital  – Save time and focus on profits and business opportunities

INTRODUCTION - PO FINANCING COMPANIES

In the old days Canadian business owners went to their bank for PO Financing and Inventory financing... no really, they did... yes, really! Most companies now know that the financing of your inventory, purchase orders, contracts, etc. is a formidable challenge in the Canadian business financing landscape  (especially when a line of credit is not available ), and the ability to purchase inventory for domestic or international orders is a valuable solution.

This is the time to check out the role of the purchase order financing company to help fund your client's large valid purchase order. Purchase order finance can provide you with the funds to pay vendors and suppliers and deliver on large orders and contracts and achieve real business growth.

PURCHASE ORDER FINANCING FOR SMALL BUSINESS IN CANADA

Simply speaking, your purchase orders or inventory were collateralized by the bank, and you borrowed against them for short-term access to capital. Therefore cash flow and working capital that was in effect tied up, or rather invested in your inventory and contracts, were monetized, and you had the ability to draw down against those dollars before the customer pays - Purchase order funding helps you launch new growth projects while improving and increasing profitability

Government purchase order financing became very popular during the 2020/2021 Pandemic for Covid related ' PPE' supplies and related assets. The ability to maximize financing and have custom tailored payment terms to your purchase order is what PO Funding is all about. Talk about the ability to launch new growth projects while improving and increasing profitability!

INVENTORY FINANCING HELPS FINANCE GROWTH!

Well, the business financing landscape changed – yet your firm still has inventory, you have growth needs, and you need the financing to drive that growth into sales and profits. If you can acquire inventory financing, then the ability to borrow against that inventory and purchase order is key to customer finance solutions. Borrowers should also note that credit insurance is available to fulfill customer orders that are higher risk

WILL YOUR BANK FINANCE YOUR PURCHASE ORDERS?

So if the banks aren’t that into inventory and PO financing in Canada, then who is? The answer is purchase order financing companies!  The reality is that it’s done via a select and specialized group of private finance firms who have total knowledge and focus on the value of your inventory and usually carry significant knowledge about your industry and the overall business model you operate in. The ability to take on larger new customers is an enviable position to be in. Using a bank line of credit is typically not the same as a PO finance transaction if in fact, a bank line is available to access capital.

THE IMPORTANCE OF ASSET TURNOVER AND GOOD GROSS MARGINS

It would help if you approached inventory financing with a positive attitude via a financing solution – by that, we mean that your presentation for the financing should focus around the positive aspects of your business – those should include inventory turns, marketability of your product, and, very importantly, the gross margins associated with your business.

We can categorically say that businesses with meagre thin margins are not the best candidates for inventory and purchase order financing terms simply because the financing costs around this financing chip away significantly at those final remaining profits.

We mentioned in our title that you should be cognizant of the risks associated with inventory financing via purchase order financing lenders  – by all means, don’t consider the financing of outdate of very slow-moving or unsaleable stock – this quite frankly will be viewed simply as a ‘cash grab' that doesn’t make sense.

You will obtain a better inventory financing and PO financing deal if you have good controls on your products – that typically might include a perpetual inventory accounting.

INVENTORY FINANCING

Clients always ask if there are any special tips or tricks around the financing proposals around PO and inventory financing. We tend to focus on the basics, which always work -

List of your inventory 

Updated financial statements

Copies of pertinent purchase orders or contracts,

Business plan or cash flow forecast.

The bottom line is that 9 out of 10 financiers have never even heard of PO financing or inventory financing, so seek the services of a trusted, credible and experienced advisor in this area to assist you in putting the right type of facility in place. Here's your chance to build credibility and trust with your supply chain around this innovative finance solution.

It's all about bridging the gap between shipment of products.. final delivery.. and of course, payment from the buyer! PO Finance is often combined with solutions from factoring companies  (A/R Factoring ) to complete the invoice payment process relative to your newly created accounts receivable. Being unable to secure trade credit should not be a factor to limit your growth plans and strategy.

Purchase order financing is different from factoring because factor financing funds the receivable invoices while the PO Finance process helps create that receivable. Also, it is not a loan per see and brings no long-term debt to the business.

KEY TAKEAWAYS

• Purchase order financing provides short-term access to capital by collateralizing purchase orders or inventory.

• Government purchase order financing became popular during the 2020/2021 Pandemic for Covid-related supplies.

• Purchase order financing companies specialize in providing funds for large purchases and have in-depth knowledge of the business landscape.

• Businesses with good controls on products and positive aspects like inventory turns and gross margins are better candidates for financing.

• Inventory financing can be combined with solutions from factoring companies to complete the invoice payment process.

• PO financing is not a loan and does not bring long-term debt to the business.

CONCLUSION

Let the 7 Park Avenue Financial team help you avoid some of the potential risks, pitfalls, and financial ‘damage’ associated with inventory and PO financing gone awry.

They might include higher-than-market rates, requests for additional hard collateral, locked-in contracts you can’t get out of, or inordinate appraisal and inventory count costs that don't properly support the financing you require.

If you are successful in avoiding those risks, the benefits will be obvious - the ability to grow sales with unlimited financing of new sales or contracts, quick turnaround for approval, and cash flow benefits derived from your suppliers being paid directly by the finance firm.

Additionally, you may be in a position to negotiate better pricing on products, thereby improving those gross margins we talk about. In many cases, government contract purchase order finance solutions can give you an edge in securing further contracts.

PO and inventory financing it's all about risk and reward – understand those risks, seek an expert to minimize them, and reap the benefits of increased sales and profit growth from the payments from your clients.

When it comes to who uses purchase order financing, we can say that any firm that cannot access traditional bank working capital and cash flow financing is a candidate for P O Funding.

P O financing works best when you have a qualified client and a legitimate supplier of goods. By the way, services are generally not able to be financed via the PO finance process.

PO Financing for startups is also available for qualified borrowers with good clients and solid suppliers to help your business scale and pay to fund that new large order! That is when an appropriate finance service makes the most sense.

CONCLUSION - LOOKING FOR THE BEST PURCHASE ORDER FINANCING COMPANY SOLUTION?

If you still have questions or need information on your  P O Financing Inventory Financing needs, speak to  7 Park Avenue Financial, your expert on purchase order financing in Canada. When it comes to how to get purchase order financing put our team on your side! Companies should have good gross margins in the 15-20% range to absorb financing costs when you accept larger contracts that will be funded.

More Info? Here's a great article from INC. magazine:

P O Financing / Inventory Financing

FAQ: FREQUENTLY ASKED QUESTIONS

What is purchase order financing?

Purchase order financing is a short-term financing solution that provides cash to businesses to pay suppliers for client orders. Accessing advance funding for customer orders and contracts allows companies to fulfill large orders and contracts that otherwise might not be financeable by the company  - allowing businesses to achieve higher sales volumes significantly.

Is PO financing a loan?

PO Financing is not a loan that puts debt on a balance sheet. The Purchase order financing process is the payment of goods made to your supplier for products ordered from clients but not delivered. Working capital is created via the P O Financing process allowing sales to be generated before payment from clients.

How much does PO financing cost?

Purchase order PO financing interest rates/fees average between  2-4 %  - rates vary based on the size and quality of the transaction and the time that the purchase order is outstanding from supplier payment to final customer payment for goods delivered and accepted.

How does purchase order financing work?

Purchase order financing companies will usually offer to cover anywhere up to 60-70% of the purchase order value to fulfill your supplier commitments on order, which ultimately becomes a financeable invoice to your client.