Purchase-order financing (PO financing) and accounts receivable financing have a few things in common. These are two financing options that can help with your small business cash flow problems. Neither option is a loan, so neither causes your business to pay interest or incur debt. Both accounts receivable financing and PO financing are generally simple to qualify for, even if your company doesn’t have a good credit rating. 

Here are the distinctive features of each, so you can choose the best option for your current business needs:

Purchase Order Financing

Purchase order financing is a financial tool to help you complete a big customer order that you might otherwise have to refuse–or fail to deliver. 

  • PO financing only works for product manufacturers or suppliers, and not for service providers. You cannot use the funds for operating costs, payroll, or other business expenses. 
  • Typically, you must demonstrate a business profit margin of 20 percent.  
  • You must have at least $50,000 in purchase orders to receive PO financing. 
  • PO financing companies will collect on your invoices, and take their fees directly from your customer’s payment to them—sending you the remaining funds, less their service fee.  
  • The PO financing company considers the creditworthiness of your customer to qualify your company for financing. They may even require that the customer be a government agency.  

Accounts Receivable Financing

In accounts receivable financing, your outstanding invoices serve as collateral for your advanced funding. 

  • Your invoices must total at least $5,000 to $10,000 per month in order to get funds via accounts receivable financing. 
  • This financing option advances you a high percentage of your invoice value, right away. 
  • You can spend these funds any way you like for your business. 
  • Accounts receivable financing can be ideal for immediate business operating cash needs. When you instead need financial help to fulfill a customer’s order, PO financing could be the best option.  

We’re experts in purchase order financing, accounts receivable financing, and other business funding options. To apply for funding, contact Eagle Bend Capital Financing today.