When your business revolves around a purchase order process that authorizes you to make or acquire goods on a customer’s behalf, you have access to a unique tool that can help you organize your cash flow. If you have never considered purchase order financing, it’s time you thought about the reasons it might work better than your alternatives.

1. Finance Projects With Their Purchase Orders

When you use a purchase order loan or cash advance program to access some of the value in your orders, the capital you get can be used to fund the raw materials and payroll you need to get the work done. That means you can accept surprise orders that require temporary staff expansions without disrupting your regular cash flow. The result is that this tool operates alongside other cash management options, providing a unique opportunity they do not.

2. You Can Manage Your Whole Cash Flow With It

The structure of purchase order financing and its approval process are both very similar to invoice financing. Like that alternative, it is also possible to use them to manage your entire operational budget, including your cash flow needs.

Financing orders as they come in when you need capital keeps things moving, and the second-round payment you receive after the customer pays the lender provides the long-term capital growth you count on. You can even adjust your quotes to account for the fees in the same way. This lets you take complete control over your cash flow as long as you have large orders coming in.

3. Purchase Order Loans Do Not Show on a Credit Report

When you finance your purchase orders, you typically do not wind up with a debt that shows on credit reports. That’s because they are usually structured as cash advances against a debt owed to you. That means you are expected to direct customers to pay the lender directly, and the lender then pays you any money that is left after the advance and fees are covered.

The result is a financial product that allows you to access working capital without affecting other applications for financing you might have in play. That lets you use it for your day-to-day cash management even when you are working on getting approved for a larger facility or a round of new equipment purchases. That kind of benefit is essential for growing companies looking to operate as efficiently as possible.