Purchase Order Financing vs. Accounts Receivable Financing

It’s a fact of life, well, at least a fact of business: companies need money to grow. This fact may have been hard to accept, or it may have hit you in the face. Either way, it is good to know that there are several financing options that will give your business the working capital it needs for continued growth. Some common loan types are purchase order financing and accounts receivable financing. The two are not interchangeable, as they are totally different types of loans. Confused? Let Ace Biz Funding explain the difference, and help you decide which is a better fit for your expanding business.

Purchase Order Financing

A purchase order loan, or PO loan, is advanced to a business that has a large purchase order or contract, but cannot fulfill it. The lender then loans the funds necessary to complete the order, and charges a percentage for the service. This way, the company can fulfill its order or contract.

For instance, if you are a small business that makes shoes, and a department store places a large order, you may not be able to fulfill the order. Ace Biz Funding can advance you the money you need to pay your manufacturer and complete the order with the department store.

The purchase order financing program at Ace Biz Funding can offer your business from $350,000 to $10,000,000. This will help you pay your suppliers and take on larger orders that you previously would not have been able to fulfill. We can approve your business in less than 24 hours.

Accounts Receivable Financing

An accounts receivable loan, or AR loan, is also known as factoring. This type of financing involves a business selling its outstanding invoices to a factor or lender. AR loans are available to any company that bills creditworthy customers that do not pay immediately. This is great for businesses who have a large amount of invoices and need to be paid now. Whether you are a retailer, manufacturer or wholesaler, businesses in a variety of industries need the cash their owed now.

For instance, if you sell clothing to stores and allow them to pay you back within 120 days, you may find you need the money immediately. In these situations, Ace Biz Funding can pay your company the invoices you are owed at a percentage, and then we are paid once your customers pay their original invoice.

At Ace Biz Funding, our accounts receivable financing advance rates range from 85% to 90%. We offer low interest rates and monthly payments, too. Our approval process is lightning fast, and our online application is very simple. We can have your business approved in less than 24 hours!

While these two types of financing have their similarities, they are really two totally different products. Purchase order financing involves Ace Biz Funding lending money to fulfill purchase orders, while accounts receivable financing involves Ace Biz Funding buying a company’s outstanding invoices. If you are interested in either lending service, contact us today, and we will help you begin our simple application process. You can be approved for funding in as little as 24 hours!