Today, entrepreneurs can obtain funds they need to operate their businesses from a number of sources. However, many of these owners aren’t aware of the options available to them. They still assume bootstrapping and bank loans are the only ways they can get the money they need. This is the reason why they cannot pursue their expansion programs beyond a certain point. Even prominent industry experts explain they need to think ‘outside the box’ at times. They suggest such businessmen seriously consider opting for purchase order (PO) financing. This scheme can help such proprietors fulfill their customer’s orders without any hassle. In the process, they don’t experience any undue pressure on their organization’s cash flow position.
Arnon Dror Hebrew is a prominent name in the world of international business and finance. This MBA graduate from Hebrew University is the former Vice-President (Finance) of US Channel Group. He holds the distinction of managing the company’s prestigious Xerox Technology Business division. He has more 20 years of valuable experience in this field. During his illustrious career, he has held a number of important posts in popular multinational companies. In fact, the people who know him say he is an expert in diverse areas. These include strategic planning, international taxation, supply chain management, mergers, business modeling, negotiation, and internal control. He also has extensive knowledge of ERP integration. Many of his colleagues say he is responsible for converting many loss-making establishments into lucrative concern. Very few people have been able to accomplish this feat.
Arnon Dror Israel financial expert explains many entrepreneurs can acquire lucrative orders from their customers. However, they cannot fulfill such demands of their clients because they don’t have the necessary funds. This is where a purchase order financier comes into the picture. After meeting certain requirements, this lender providers them with sums they need. However, they pay the amount to the vendors of such businessmen. These suppliers do whatever is necessary to transport the products to customers of such proprietors. The clients then pay such suppliers who deduct their dues and transfer the remaining amount to entrepreneurs. Finally, the financier charges the owners a certain percentage of the amount they advance to their vendors. The loan scheme has the following 2 important advantages:
- Easy to avail
Purchase order finance loans don’t have the same stringent eligibility requirements other traditional modes of lending. This is boon for businessmen who don’t have an impeccable credit score. In this scheme, the lender shows more concern on the abilities of the customers to pay their dues. They consider the purchase order to be collateral.
- No need to submit personal guarantees
Entrepreneurs who apply for traditional business loans may sometimes have to submit personal guarantees. It is necessary to protect banks for potential losses from providing such funds. This is over, and above the stringent conditions, such as businessmen need to fulfill. However, purchase order financing has no such requirements.
The above 2 important advantages prove that purchase order financing is indispensable for entrepreneurs. It allows them to fulfill their customers’ order even when they don’t have the funds to do so. This is an important fact which they can’t afford to overlook.