Manufacturers: How The New Economy Is Fostering Expansion
The current strength of the economy has positioned companies across all industries for business growth. One only has to look at the increase in the freight industry to see that more goods are being moved to customers throughout the United States. Entrepreneurs at all levels are poised for business growth, but not all solutions are created equal.
Manufacturers Are Moving Away From Traditional Loans
Using financing from traditional lending institutions has long been the solution used by growing companies. Yet traditional loans always come with debt, and that can severely hinder business growth potential for manufacturers. Once the loan is approved by the bank, a business must calculate how much revenue is carved out to repay the balance owed. Additionally, the prospect of a traditional loan and all it entails can wind up being very cost-prohibitive for smaller manufacturers, which forces them to put off growth projects until they have accumulated enough capital.
There Is An Alternative For Growth
Instead of taking out loans for business growth, many manufacturers are using purchase order financing. Purchase order financing is used by businesses looking to take on large customer accounts, or when they are faced with unexpected orders. Purchase order financing advances capital directly to suppliers, so businesses can purchase the materials and inventory needed to fill large orders. When the order is completed and the customer remits payment, the suppliers are given their due, the balance owed on the financing is zeroed out, and the remainder is delivered to the business as revenue. This allows manufacturers to grow without being held back by long-term debt.
Leveling The Playing Field
Sometimes success can be daunting. Many smaller manufacturers end up turning down large client accounts and unexpected order because they do not have the capital or materials to handle production on a bigger scale. This not only leaves money on the table but makes customers seek out larger competitors who can handle their requests. Purchase order financing levels the playing field so small businesses can compete with larger companies in the same industry.
Wise Commercial Capital offers a wide range of financing solutions to promote business growth. If you are trying to position your manufacturing business to reach the next big milestone but want to avoid the debt and red tape of traditional loans, contact our offices and put our expertise to work for you.