Purchase Order Finance: Powering Canadian Business Growth | 7 Park Avenue Financial

Tweet

YOUR COMPANY IS LOOKING FOR PURCHASE ORDER FINANCING AND FACTORING! 

PURCHASE ORDER FINANCING SOLUTIONS IN CANADA

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 

"The greatest risk is not taking one." - Peter Drucker

"Stop turning away big orders – fund them in 24 hours with Purchase Order Finance"

7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Purchase Order Finance  and working capital solutions  – Save time and focus on profits and business opportunities

7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”

TRADE FINANCE SOLUTIONS VIA PURCHASE ORDER FUNDING  

Purchase order finance solutions in Canada address questions from new clients. Their issue? 'Getting working capital financing for my orders and contracts is harder than getting the order itself?'  Let's dig in.

FINANCING CASH FLOW VIA P O FINANCE SOLUTIONS!  

Purchase order finance is an excellent financing option for businesses that do not have the funds to fulfill contracts and orders from new or existing clients -

The ability to cover the costs of goods involved in the orders allows a business not to have to reject larger orders  - giving the company flexibility to grow sales revenues via the purchase order financing agreement without incurring additional debt or equity financing - thereby retaining ownership and achieving the working capital needs to increase sales revenues via the process to access PO financing.

Qualified businesses searching for a financing solution will find the funding process relatively simple via a purchase order financing company.

The PO Funding process allows the company to access funds while capitalizing on business opportunities. Larger purchase orders will enable the company to fill large orders and contracts to maximize sales revenues and profits.

How do Canadian business owners/financial managers address their ability to obtain large new orders and contracts, fulfill the job, and—did we forget to mention—get paid?! Of course, the working capital and cash flow generated by those contracts and orders will help them grow sales and profits.

3 Uncommon Takes  On Purchase Order Funding Solutions

1. Purchase Order Financing can strengthen supplier relationships by enabling faster payments.

2. It's becoming a strategic tool for seasonal businesses to manage peak demand periods.

3. Companies can use PO financing to negotiate better terms with suppliers through bulk purchases.

DO  CANADIAN BANKS FUND PURCHASE ORDERS?

In general, Canadian banks do not participate in direct purchase order funding solutions and are reluctant to provide a regular business loan for the sole purpose of financing purchase orders.

Companies that have large, well-established business lines or credit in place would typically use these bank business lines of credit to solve a short-term financing option for large orders/contracts.

So how does purchase order financing and P.O. Factoring work in Canada? And is it available?! 

Here are your answers:

Looking for the basic 'mechanics' of PO Finance? It starts with having a PO and contract from a legitimate creditworthy company - More often than not some of these clients can be outside of Canada - we see that all the time.

The PO  finance firm - typically a commercial finance company - not a bank, provides you with the minimum amount of capital you need to complete the orders. In some instances, this might involve making payments to your supplies on your behalf.

In some cases, the PO finance or PO Factoring firm could be asked to issue a letter of credit to a supplier on your behalf - a common PO financing and factoring strategy that achieves similar objectives.

Purchase order financing works and provides you with capital for the key elements of your business, i.e.  Product purchases, payroll, and working capital to carry receivables.

Most clients we meet for needs in the purchase order financing area have what can only be described as the best and worst of problems - that is, they have the order; they just don't have access to the capital to complete the order or project. 

The downside of being able to fulfill those orders without proper financing is that you don't want to strain your relationship with key suppliers. At the same time, you strive to deliver your product or service on an 'on-time' basis.

Naturally, your ability to accept larger orders enhances your overall competitiveness within your industry, and larger orders usually translate (hopefully!) into more significant profits. That's how smaller companies get more prominent.

Canadian business owners and financial managers consider purchase order financing and factoring their purchase orders. However, they don't want to take on additional debt or give up ownership of their business to an investor/partner.

KEY BENEFITS OF PO FINANCE  

Therefore, the benefits of this type of Canadian business financing are apparent:

Being competitive on large orders/contracts! PO Finance pricing is typically a flat fee, so it is a predictable type of business financing cost. However, borrowers should note that purchase order financing rates are higher due to general lender risk, so a business must have good gross margins to benefit from this business funding.

Other alternatives to order/contract financing? You could enter into long-term working capital or cash flow loans, typically involving fixed payments over 3-5 years. 

PO Financing strategies do not add debt to the balance sheet—you're monetizing/cash-flowing an order/contract! Although purchase order financing is generally quite a bit more expensive than bank financing, it allows you to do short-term funding without taking on additional debt on your balance sheet.

Companies should be prepared to provide up-to-date financial statements and other business credit information as required.

KEY TAKEAWAYS IN PURCHASE ORDER FUNDING 

• 78% of businesses using PO finance report increased revenue growth

• Average PO finance transaction size: $250,000

• Typical approval rates: 65% vs 27% for traditional loans

• Processing time reduced by 70% compared to bank loans

• 82% of users secure repeat funding

• Purchase Order  Financing Cost should always be a consideration

CONCLUSION - BUSINESS GROWTH VIA THE PO FINANCE SOLUTION   

Call  7 Park Avenue Financial,  a trusted, credible and experienced  Canadian business financing advisor who can provide you with information and help with the application process. We'll demonstrate how PO financing and factoring work based on your unique company/industry needs to help your business grow.

FAQ: FREQUENTLY ASKED QUESTIONS /PEOPLE ALSO ASK / MORE INFORMATION   

What is purchase order finance?

PO finance provides a funding solution for companies that require suppliers to be paid in advance so that they can efficiently satisfy purchase orders and contracts. PO financing companies are in a position to provide small business loans to medium-sized and small business owners, allowing the company to secure financing and pay suppliers for outstanding customer orders.

Invoice factoring solutions can also be utilized as a part of the process. Companies should be able to demonstrate good profit margins as PO loans have a higher finance cost - the lender will perform proper due diligence on the seller, client, and supplier. Competitive rates are available for firms with a higher credit quality in their suppliers and customers-  Unlike purchase order financing  which funds orders and contracts via  confirmed purchase orders  Factoring financing is for funding for already generated invoices to clients.

Small businesses can also qualify for this type of cash advance financing as they seek liquid capital/ cash flow to facilitate orders and contracts.