Who Really Benefits from Apparel PO Funding?

In the apparel business, getting paid involves a lot of waiting. You get a purchase order, so you need time to arrange a delivery from your suppliers to your customers. Then when the goods are delivered, the customer then makes you wait at least 30 days after delivery before you get paid. Sometimes this is 45 days or even as long as 90 days.

But instead of waiting while all these days pass, the apparel PO funding method gets you your money right away. You don’t even have to wait to arrange for the delivery before you get your money. That method is called factoring, which involves using the account receivable to get a cash advance. In the apparel PO funding method, you use that purchase order to get you the money you need.

So would you benefit from apparel PO funding? It depends. See if you can answer yes to any of the following questions:

  • Do you need the working capital? If you don’t have the money to pay for the material and labor required to fulfill the order or to pay your supplier, then you may have to pass on the order as “too big” for you. But with the PO funding, you use that purchase order to leverage funds.
  • Are you a newbie at trying to generate financing? If so, you’re not alone. It’s not always easy to get the money you need. Getting a business loan can be very complicated, and banks and other lenders don’t always make it easy on you.

In general, you’ll have to explain why you need the money. Your credit (not just your company’s but your personal credit too) must be really good, and you need to show some form of collateral.

  • Does the order require a quick response from you? Even experienced borrowers will need some time to arrange financing from traditional lenders like banks. By the time you get your money, your potential customer may have moved on to another company who has the capability to provide what they are asking for.

But PO financing moves very quickly indeed. You can get your money in a couple of weeks, and perhaps in less time than that.

  • Do you want to avoid shouldering risk to your credit? That’s not a problem with PO funding, because it’s not technically a loan. It’s more of a cash advance, so your credit is not affected at all.
  • Do you wish to keep your customers separate from your suppliers? If you’re a distributor, then this is probably the case. The entire process, however, will help separate your suppliers from your customers.

If you can answer yes to any of these questions, then at the very least you need to keep your options open when it comes to PO funding.

But all in all, it’s just a question of whether or not you want to take advantage of a profitable opportunity. If your profit margin is quite low, then perhaps it’s not for you. But if the purchase order represents a significant profit, then PO funding can help you get the lion’s share of the profits.

Published by

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

Leave a Reply

Your email address will not be published. Required fields are marked *