While the apparel industry is not completely spared from the financial challenges that the entire world is experiencing now, forecasts for the industry are generally optimistic for this year. In fact, according to a report filed by the Business Survey Committee of the Institute for Supply Management, the apparel industry is growing, and it is expected to continue growing for the foreseeable future. So, as a player in this industry, you should really consider apparel PO funding so that you can take advantage of this growth.
The State of the Apparel Industry
The report surveyed purchasing and supply executives in the country, and according to them the apparel industry may see even better days ahead.
- Apparel can expect a growth of revenue for 2014.
- Companies are operating today at an average of 82.3 percent of normal capacity. This is an increase from the average of 80.3 percent reported in December 2013. Apparel is the leading industry that report operating capacity levels much higher than the average.
- Apparel is one of the industries that can expect increases in production capacity for the year.
However, if you are in the apparel distribution business then you also need to be aware of one important nugget mentioned in the report: The apparel industry should also brace itself for an increase in capital expenditures for 2014.
How Apparel PO Funding Can Help
The problem for many in the apparel business these days is that banks are still wary of lending money to them. This is especially true if you are a small business asking for a small loan, and not a megacorporation asking for a multi million dollar loan.
Sometimes businesses have turned to using credit cards for their working capital. But in most cases this is insufficient. The money you can get is often not enough, and then you still have to pay horrendous interest rates as a result.
That’s where apparel purchase order financing comes in. The process in its essence is simple. Let’s say you are an apparel distribution company, and you get a large order amounting to $200,000. This is great news obviously, but then, you have to pay your suppliers up front. If you don’t have the capital, then you may be forced to refuse the order.
On the other hand, you can use the purchase order to get the capital you need. The lender can advance you a percentage of that PO, or perhaps they even may be willing to advance you your capital needs as long as you meet certain milestones. When the buyer then receives the goods it ordered, the payment comes first to the lender, who takes its cut before the rest is passed on to you.
Advantages of PO Financing
Right away, you can see how PO financing can really help you. Without it, you may not be able to meet the requirements of the purchase order, and so you will have to forego all those potential profits. And since banks aren’t all that helpful, you stand a much better chance with purchase order financing lenders. The approval rate is much higher, and the process is much faster.
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