Tweet

Inventory Financing & Purchase Order Financing in Canada

Guest post by: Stan Prokop

Article Overview: Information on inventory and purchase order financing in Canada. How Canadian business owners can finance new orders, inventory and large contracts .

Inventory Financing & Purchase Order Financing in Canada

Most Canadian business owners and financial managers probably don't know, in our opinion at least, that financing options exist in Canada for purchase orders and inventory. In covering off financing alternatives such as this with clients we tend to lump these two types of ( relatively unknown ) financing in with the terms ' alternative financing ' and based lending']);"> asset based lending .

Clients who typically have a need for inventory or purchase order financing have typically been unable to arrange traditional financing with their banks or other term lenders.

One of the most common needs that drives these types of financings is the global economy - what do we mean by that. Simply that many clients are telling us that their new suppliers over the last several years are in the U.S. and China, and in some cases Europe. Naturally it is obvious that suppliers in those countries are unable to extend credit to Canadian firms. You know what comes next! They require cash up front in order to release goods.

Even in the best of economic times Canadian business would have a challenge in financing inventory and contracts, paying up front, etc. 2008 - 2009 and the start of 2010 certainly is hardly the best of times, so Canadian firms, especially small to medium size, face huge challenges in generating cash flow and working capital to fund inventory and purchase orders . (Let's not forget that at that point you have only made the sale and now you have to wait 30-60 days or longer to get paid. Therefore your investment in inventory and receivables becomes even greater.

What is the solution? That solution is simple to consider inventory or purchase order financing as a mechanism to finance your business. This type of financing can be arranged for firms of all size, it will ensure your suppliers get paid promptly, and can be generally set up within a 30 day period if you employ the services of a trusted, credible and experienced business advisor in this area.

So what is involved in P.O. financing and inventory financing and how does it work. Any type of business financing requires a standard application process, i.e. info on your firm, its owners, your current financial position and prospects, etc. Naturally strong emphasis is place on the actual orders and contracts those selves, or the type of inventory that you require that needs to be financed. It is somewhat important that your clients and suppliers can be validated - i.e. are they legitimate companies who have the ability to either supply your firm, pay your firm , etc . A well known name as a client or supplier certainly helps, but with the assistance of the internet, Dun and Bradstreet, and other sources most companies can be validated today from anywhere!

When you purchase orders are financing your suppliers are paid up front on your behalf - you pay the purchase order firm generally as soon as you are able to generate a sale and receivable . For that reason it is necessary to ensure you have either a banking or receivable financing/factoring facility in place

Purchase order financing has a higher cost of finance that traditional financing, so it is also important that you have some good gross margin profit on your transactions, as those solid margins help offset the cost of the financing.

In summary, purchase order and inventory financing are becoming more popular in Canada, although many business owners are still unfamiliar with this unique type of financing. While the financing is costly it can nonetheless help you grow sales and profits tremendously. Investigate this financing with a specialist to determine if it's the right growth driver for your firm .

Related Articles
  Purchase Order Financing Canada
  Business Inventory and Purchase Order Financing Canada
  Inventory and Purchase Order Financing – Canadian Solutions
  Guess Who’s financing inventory and using purchase order Finance ( P O finance) ? Only Your Competitors – that’s who !
  Are Inventory financing lenders and P O Factoring solutions your best business financing bet ?
  Small Business and Medium Sized Business Inventory and Purchase Order Financing in Canada
  Small Business Inventory Financing in Canada
  Inventory Loans and Purchase Order Loans – How does Inventory Financing Work in Canada
  What If Inventory Financing Lenders Were the Solution to Your Cash Flow Based Financing
  What is the Solution to Finance Inventory for Canadian Business?
  Inventory & Purchase Order Financing - Canada -
  Real World Lessons On Inventory Financing from Purchase Order To Cash
  Purchase Order and Inventory Financing in Canada
  Is Financing Inventory and Financing Purchase Orders Actually Possible In Canada ? Yes You Can!
  A Different Solution for Business Inventory Financing
  P O Financing and Inventory Financing – Benefits... and Risks!
  Inventory Financing – Canada - A unique financing challenge
  Inventory and Purchase Order Financing in Canada
  Inventory and Purchase Order Financing Solutions for Canadian Firms
  The Myth Of Inventory Finance Companies

Article Tags: inventory financing Canada, po financing canada, purchase order financing Canada



Related Forum Posts
grants for restaurants - Well friend I don’t have any idea about government grants for restaurants, but I will recommend that you may try on some banks who offer loans for small business where the government will have some guarantee. Beside that Restaurants business is very risky so some of banks who gave some Financing Loans they will look at on it if there is enough solid business plans.
Re: How to finance your independent movie - Hi, The video doesn't come up with its own URL... But it's the very bottom video on the page. Here's the description of it: Financing, Production and Social Impact of Feature Films Host- Carol Atwood - Founder, Spartacus Media Enterprises Panelists: Bill Johnson - Co-Founder and Partner, Inferno Distribution Steven Haft - Producer, Media Consultant Michael Goorjian - Actor, Producer, Writer
re: restaurant start-up - I'm not sure about government grants for restaurants, but my recommendation would be to approach a lender that offers loans under the Canadian Small Business Financing Loan program where the government will guarantee 85% of the loan. You can borrow up to $250,000 to finance equipment and renovations under this program. Restaurants are very risky business, however some of the Chartered Banks will look at restaurants if there is enough of an initial equity investment and you have a solid business plan (experienced management team, good concept and strategic location).
Re: What Franchisors Want From Franchisees - Thanks for the follow up Russell. I found the following tip to be especially helpful: [quote="RussellWebb":2vqd3szf]Financing arrangements will vary - if you can show that you have 20% above all of your start-up costs, this would help. The more assets you own the better.[/quote:2vqd3szf] By the way, is there a way for someone to achieve a close to "1000" credit score? I've always paid off my Visa bill and car payments on time... but I bet my credit score is not even between 800-1000. I wonder what the secret is to 1000?
Seek Venture Capital & Funding - Hello, Greetings from India. I am Seeking Venture Capital for Offshore Software Company Start-up. Need advise along with Business Model Sample. I have a basic outline for an offshore company. 1. Technology - like Microsoft Dot Net, Java, LAMP 2. Talent Team - Found Good Technology Developers. 3. Where I can get the leads/potential customers - Leads have been identified who are willing to move forward offshore projects. 4. I do not have resources like funding. It is a very critical factor to me Industries: Manufacturing, Real Estate, Retail, Insurance, Distribution & Logistics, Healthcare, Industry Associations and Software Product Development, Agricultural Industries and Etc. Services: Offshore Software Development Company. Offices to be located: Hyderabad, Andhra Pradesh, India and USA. Products/Services/Applications in areas like POS & Billing, Sales & Distribution, Production Planning, Material Management, Inventory Control, Plant Maintenance, Purchasing, Accounting and Logistics. Dynamic Web Programming with Database Driven Content Management Systems, Online Stores for E-Commerce, B2B Solutions, Community Portals, Website Redesign and Development, Custom ERP with Enterprise Wide Functional Modules such as Marketing, CRM, Accounting, Inventory Control, Sales & Distribution, Production Planning, Purchase & Stores, Logistics and Supply Chain. Seek your further questions and help. Thank you, Best Regards, Jayapratap.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Convening a focus group for a niche product

How to Conduct a B2B Marketing Content Audit

Starting a Business a Brave Move or a NoBrainer

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.