Your worst business nightmare has just come true – you get orders and contracts! What now? How can Canadian businesses survive financing difficulties when your company has traditionally been unable to finance large new orders and sustained growth?
The answer is PO factoring and the ability to access inventory finance lenders when you need them! Let’s look at a real-life example of how our clients achieved business financing success, obtaining the type of financing needed to acquire new orders and products to fulfill them.
This is your best solution – call your banker and let him know that you need urgent financing which will multiply your current financing needs, as you will have to fulfill a large number of new orders. Ok… we’ll give you time to get up from your seat and stop laughing.
Seriously though… we all know that most small and medium-sized companies in Canada cannot access the business credit they need to solve the dilemma of obtaining and supply financing to meet customer demand.
So it’s all gone – definitely not. You can access purchase order financing through an independent finance company in Canada – you just need help navigating the minefield of who, how, where and when.
New orders in bulk challenge your ability to satisfy them based on how your company is financed. That’s why PO factoring is a possible solution. It is a one-time or continuous transaction solution, allowing you to finance purchase orders for large or sudden sales opportunities. Funds are used to cover the cost of purchasing or creating inventory until you can produce products and bill your clients.
Is the lender of inventory financing the perfect solution for every company. No financing ever exists, but more often than not, it will give you the cash flow and working capital you need.
PO factoring is a very independent and definite process. Let’s examine how it works and how you can take advantage of it.
A key aspect of such financing is a clear purchase order from your customer who must be a creditworthy type of customer. P O Factoring can be done with your Canadian customers, US customers, or foreign customers.
PO financing gets your suppliers paid in advance for the products you need. Inventories and receivables arising from these transactions are guaranteed by the finance company. When your invoice is created, it is financed, thus completing the transaction. So basically you’ve paid for your inventory, charged your product, and when your customer pays, the transaction is closed.
Factoring and inventory financing in Canada are the more expensive forms of financing. You need to demonstrate that you have solid gross margins that will absorb an additional 2-3% per month of financing costs. If your fee structure allows you to do that and you have a good marketable product and good orders, you are a perfect candidate for factoring from an inventory financing lender in Canada.
Don’t want to navigate the maze itself? Talk to a trusted, credible and experienced Canadian business financial advisor who can ensure you maximize the benefits of this growing and more popular business credit financing model.