What are The Benefits of Government Purchase Order Financing? Available For Small Companies: Many companies, especially smaller ones, shy away from going after government contracts because they believe that they are out-of-reach financially. The working capital, which is necessary to purchase materials to complete a government job, meet any ongoing financial obligations, may not be available to many companies. As a result, companies don’t even try looking for a factor who can help. Others will try to put themselves in a position to compete for such contracts by attempting to take out a loan. Sometimes it works, but often it does not. Because of a requirement of good credit and an organization must have been in business for a certain time. In all these cases, it will be difficult to qualify for a loan. Purchase order financing is one way for them to fulfill a government contract even if they don’t have any money to purchase materials.
Easily Available Vs. A Bank Loan: If a government contract requires the manufacture of some product, then PO funding provides businesses with a way to secure the materials they need; without the company using any monies of their own. It works exceptionally well for companies doing business with the government. Many banks and accounts receivable funders specifically exclude Government Receivables from availability. Factors understand the Federal Acquisition Regulation (FAR) and the culture of dealing with and getting paid by the Government. Also, factoring companies knows one of the best ways to grow your business is through sales to Government entities. Factors want to be there for your company’s working capital needs.
Easy to Setup: A Factor plays a significant role in the purchase order funding process. They purchase the materials a company needs to fulfill their government contract. Once the business has what they need to manufacture the product they have been contracted to, and are paid, they share a portion of proceeds with the Factor. This is a win-win for all parties. The government gets the work they require done, the Factor gets paid and the company looking to fulfill the contract gets the materials they need to do so; at no upfront cost. The latter allows companies, even those without a lot of cash on hand, to compete with larger companies that have bigger budgets, for government contracts.
Purchase order funding is ideal for companies looking to work with the government, especially those that are not particularly liquid or have a lot of money. Instead of them having to borrow cash, or forgo going after lucrative contracts, they can compete because they have the funding to do so. A third party will be able to purchase the materials they need so that they can service any government contract they are fortunate enough to secure. The best thing about this arrangement is that they can repay them in-full from the profits they generate selling the said product or merchandise. This allows them to forgo taking on new, costly, and long-term debt. PO funding is thus, a great option and a good alternative for companies interesting in working with the government. It allows them to do so without traditional, commercial financing.
Disclosure: We are referral partners, this site contains links to services for which we may receive commissions.
Easily Available Vs. A Bank Loan: If a government contract requires the manufacture of some product, then PO funding provides businesses with a way to secure the materials they need; without the company using any monies of their own. It works exceptionally well for companies doing business with the government. Many banks and accounts receivable funders specifically exclude Government Receivables from availability. Factors understand the Federal Acquisition Regulation (FAR) and the culture of dealing with and getting paid by the Government. Also, factoring companies knows one of the best ways to grow your business is through sales to Government entities. Factors want to be there for your company’s working capital needs.
Easy to Setup: A Factor plays a significant role in the purchase order funding process. They purchase the materials a company needs to fulfill their government contract. Once the business has what they need to manufacture the product they have been contracted to, and are paid, they share a portion of proceeds with the Factor. This is a win-win for all parties. The government gets the work they require done, the Factor gets paid and the company looking to fulfill the contract gets the materials they need to do so; at no upfront cost. The latter allows companies, even those without a lot of cash on hand, to compete with larger companies that have bigger budgets, for government contracts.
Purchase order funding is ideal for companies looking to work with the government, especially those that are not particularly liquid or have a lot of money. Instead of them having to borrow cash, or forgo going after lucrative contracts, they can compete because they have the funding to do so. A third party will be able to purchase the materials they need so that they can service any government contract they are fortunate enough to secure. The best thing about this arrangement is that they can repay them in-full from the profits they generate selling the said product or merchandise. This allows them to forgo taking on new, costly, and long-term debt. PO funding is thus, a great option and a good alternative for companies interesting in working with the government. It allows them to do so without traditional, commercial financing.
Disclosure: We are referral partners, this site contains links to services for which we may receive commissions.