The Rewards of Apparel PO Financing

The Rewards of Apparel PO FinancingApparel businesses belong to a giant industry. In fact, the US apparel market is actually worth $225 billion, so there’s a lot of money to be made.

But it’s not always smooth sailing in the apparel industry these days. The entire industry needs to face new challenges head on, while traditional problems must also be faced. And one of these problems in this industry is the need for financing.

Uses for Additional Apparel Financing

There are many possible reasons why a company may need additional financing. A manufacturer has to deal with rising labor costs. A wholesaler needs to pay off manufacturers and suppliers while waiting for their retailer customers to pay up. Retailers need to deal with the volatile fashion industry in which a popular fashion item can suddenly become unpopular within a short time.

Companies can also use the money to expand their range of products, boost their advertising and marketing, increase their inventory, and pay for operating expenses such as payroll.

The money can also be spent fulfilling a large contract. Sometimes, a large contract may not be doable given the limited cash flow of a wholesaler or a manufacturer. There’s not enough money to produce the number of apparel items specified in the contract.

Obtaining Addition Financing

While banks are often the first choice when it comes to financing an apparel company, often they’re not the best option. That’s because the chances of getting a loan approved isn’t good. In addition, the entire loan application process takes a great deal of time to complete, even if the loan application is eventually approved.

This interminable loan application process can prevent a company from taking advantage of any sales opportunity in the meantime. And that’s why apparel purchase order financing may be the better option.

How Apparel PO Financing Works

With apparel PO financing, the purchase order is used as a means of getting the money needed to fulfill the purchase order.

Let’s say that a retailer customer asks for 1,000 pairs of jeans from a wholesaler, and promises to buy each pair of jeans for $100. That’s a great opportunity for a wholesaler who knows where to get them for $50 each.

But the problem is that the wholesaler doesn’t quite have enough money to buy 1,000 jeans from suppliers. And that’s where the apparel PO financing comes in.

The lender takes into account the size of the order, the trust-worthiness of the retailer, and your ability to deliver the order quantity. If everything checks out, the lender will pay your suppliers while it also does collection duty with your retailer customers. When your retailer customer pays in full, the lender then gets the payment and gives it to you, minus a small fee for the services they provided.

As you can see, with this arrangement you can boost your reputation among large retailer customers, and you don’t have to miss out on profitable opportunities.

 

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Chris Lanchech

Hi everyone, my name is Chris and I am a junior analyst at Neebo Capital and an inspiring blogger. We enjoy speaking with business owners and entrepreneurs who come to Neebo Capital looking for cash flow solutions. Give us a call toll free at 1-888-382-3766 or Visit us online at www.neebocapital.com

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