Well, if factoring your invoices is still not getting you the working capital you need you may need to look for more creative ways to generate working capital. One such way is purchase order (“PO”) financing. PO lenders are asset based lenders just like factors and banks but PO lenders advance on purchase orders not invoices or receivables.
Purchase order financing is a great solution for when the suppliers and vendors want you to pay upfront for cost of goods but you cannot get an advance from your factor until the goods are delivered and the invoice is valid. This is a common cash flow problem for manufacturing companies especially because the invoices will not be valid until the goods are delivered at the destination point.
The steps to being ready for purchase order financing are really quite simple. First you need to get a purchase order from your customer, second you need to find a reliable supplier for your products, and place the order with that supplier. Last, you need to have a factor that will advance against the invoice and pay off the PO lender. Factors and PO lenders can work together to make sure you have the capital you need to grow your company!