A purchase order financing company can help businesses experiencing a lean sales period as well as start-ups that are growing rapidly and need quick capital.Purchase order financing keeps supply chains & both supplier and buyer operations active even if they are low on working capital. Purchase order financing companies can provide timely funding to businesses who need to purchase materials urgently but do not have the necessary money in hand.Let’s first take a look at the top advantages of purchase order funding. There are both pros and cons of purchase order financing & businesses must weigh both before availing them. On the other hand, businesses can stop using it if there is a drop in order volume.Īdvantages and Disadvantages of Purchase Order Financing If the cash flow drops, funds can be raised using the outstanding purchase orders. ✓ Unlike regular business loans, purchase order loans are flexible. So, purchase order finance is great for startups as it helps them achieve growth while shoring up cash flow. ✓ Typically, startups are in rapid growth mode, but their lack of track record makes it challenging to secure funds to realise the growth. In the case of purchase order finance, some lenders don’t require any personal guarantee, which means the lenders absorb the risk if the borrower cannot pay it back. ✓ Business loans usually require the promoters to sign a personal guarantee, which means failure to repay leads to the seizure of personal assets. It is easier to qualify for purchase order loans where the purchase order itself acts as the collateral for the loan. ✓ Purchase order finance is a good option for businesses that are finding it difficult to secure approval for a loan against a purchase order in India within a reasonable time. However, to understand its full usefulness, let us look at some of its major benefits. Purchase order finance is an excellent solution for small businesses struggling to rise above the cash flow problems to fulfil an order. Benefits of Purchase Order Financing with Yubi
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