Generally speaking, there isn’t a “right” or “wrong” financing option, but every business has its own unique needs, and where a company receives its funding may seriously impact its future success. There are many financing options available, and some may fit one company better than another. We are here to help you navigate the best options available in order to create more cash flow for your business.
When a company is in need of short-term capital, Accounts Receivable (AR) financing and Purchase Order (PO) financing are two viable options. These choices are especially appealing to businesses with profiles that do not fit traditional lending channels. But what exactly is AR and PO financing, and what are the differences between the two? Lets find out:
Accounts Receivables Financing
AR financing helps companies to free up captial that is otherwise stuck in accounts receivables. They do so by selling or borrowing against their outstanding invoices at a discount or for an interest charge to financing and factoring companies such as Far West Capital. The finance company will, in turn, provide capital to the business and help solve a timing problem for the business.
Purchase Order Financing
PO financing is an advance to a business, obtained by a purchase order or contract, to cover the cost of manufacturing or shipping a product or service. While AR financing pertains to goods or services that have already been delivered, PO signifies intent to buy.
Both of these financing options offer great opportunity for obtaining cash quickly. What’s more, both AR and PO financing allow you to maintain full company ownership, which is less risky for you as an entrepreneur and allows for more money in your pocket in the long run.
Far West Capital provides alternative, non-traditional financing, such as accounts receivable factoring, asset-based lending, and purchase order financing that can help your business grow. How do you know which option is the best for your company? Give us a call and we can give you our best recommendation, whether it is Far West Capital or not.