How,Financing,Can,Help,Reselle business, insurance How PO Financing Can Help Resellers and Wholesalers
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Being a reseller or wholesaler is all about moving product. The more product you move, the higher your revenues and profits. But moving high volumes of product requires quite a bit of working capital. Why?Well, unless your company is well established and has credit, your suppliers will demand that you pay them upon delivery. However, your clients will most likely insist on paying you in 30 to 60 days. This leaves your business with a significant cash flow gap. If your company has significant cash reserves this will be no problem. If it doesnt, it can spell disaster.One solution to this challenge involves invoice financing. Invoice factoring eliminates the 30 day payment wait and gets your invoices paid in as little as 2 days. Factoring invoices can help you streamline your cash flow and grow your business. But, there are situations where factoring alone wont be able to solve the cash flow crunch. For example, what if you get a purchase order that is so big that it exceeds your current working capital?Then, the solution is to use purchase order financing, a little known but highly effective tool to finance growing resellers and wholesalers. The concept behind po financing is a very simple one. The purchase order financing company provides payment to your suppliers, enabling you to close the sale and deliver your order. The transaction with the financing company is settled once your customer pays for the goods. PO funding enables you to take large orders and grow your business effectively. Since the financing company settles the transaction once your customer pays their invoices, the success of a purchase order funding transaction depends wholly on doing business with reliable customers, such as government agencies or large companies.To be able to use purchase order financing effectively, your company should meet the following requirements:1. Do business with customers that pay reliably, ideally large companies or government agencies.2. Profit margins of at least 15%3. Your company should re-sell (rather than manufacture) goodsIt is not unusual for resellers and wholesalers to use po financing in conjunction with factoring financing, enabling their businesses to have optimal cash flow and the added benefit of being able to take orders of any size.
How,Financing,Can,Help,Reselle