Purchase Order Financing Versus Invoice Factoring

Invoice factoring and purchase order financing are two of the most alternative financing solutions available for new business owners. What’s great is that these financing solutions are also available for businesses unable to maintain a regular cash flow. It’s not a secret that this is an impossible task for many organizations. The thing is that only a few business owners know how to differentiate PO financing from invoice factoring. When it comes about choose the right alternative financing solution for your business you need to ensure that you make an informed decision. Otherwise, you may end up using an alternative financing solution unable to help you achieve your tasks.

PO financing is an alternative financing solution that is dedicated to distributors, importers and exporters. These three categories of businesses are recommended to use PO financing because this financing solution offers them the chance to maintain a regular cash flow and fill more customer orders. Specialists working in the financial field say that PO financing does not work for other categories of businesses.

On the other hand, invoice factoring is an alternative financing solution that’s dedicated to numerous categories of organizations. Invoice factoring, also known as accounts receivable factoring, offers organizations the chance to sell their outstanding invoices and get immediate cash.

An important thing you need to consider is that no one is allowed to use these two financing solutions for free. Those who decide to use PO financing or invoice factoring are required to pay a certain fee. This fee varies and it is calculated by the company of whose services you decide to use.

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