Working capital and funding for production can be a big issue for a growing food business. Whether you are producing cereal or processing vegetables you need the capital to purchase raw materials, pay your co-manufacturer and cover the costs of packaging. The cash cycle can take 60-120 days before you ship and invoice to be paid. Purchase Order Financing and Accounts Receivable Factoring can provide you with the working capital you need to operate and grow your business.
So what are the challenges with financing the production of food or grocery products? Manufacturing food products can be very cash and time intensive. This means your money can be tied up for a long period of time, straining your cash flow. Certain trade secrets and quality concerns make it challenging to outsource everything. Limited shelf life and seasonal fluctuations sometimes make it challenging to manage cash flow.
Work In Process Purchase Order Financing for food businesses is a great way to help alleviate the stressors these issues may have on cash flow. With the working capital you need to produce and sell your products, you no longer have to worry about turning down larger orders.
Purchase order financing allows food and grocery businesses to manufacture goods on time without interruptions to your supply chain or customers. Accounts Receivable Factoring on the back end allows you to offer your clients extended terms without negatively affecting your cash flow.
Finding an experienced purchase order financing partner like Star Funding is important. Having the right relationship in place helps make sure there are no interruptions to your supply chain. In some cases, having the right financial structure in place can even help you obtain early payment discounts from your suppliers.
Benefits of Purchase Order Financing
STAR Funding offers flexible PO funding options, helping manufacturers purchase what is needed to successfully deliver on schedule. Purchase Order Financing also gives you a chance to complete a delivery without putting your company at risk of exhausting cash reserves. With a good purchase order financing partner you no longer have to worry about turning down larger orders. Purchase Order Financing for food businesses is also available for production processes that are more complex, Work-In-Process (WIP) Funding allows you to finance ingredients, packaging, and other costs associated with production.
Working with STAR Funding
Founded in New York City, the restaurant capital of the world, STAR Funding is the premier purchase order finance company for food manufacturers and importers. Located in Midtown Manhattan, STAR Funding has been providing financing to food distributors, manufacturers, and importers for over 18 years. Understanding the ins and outs of the food business, the knowledgeable team will work with you to provide secure, cost effective PO Funding solutions that will position you for success.
PO Funding is not a business loan PO Funding makes sure your suppliers get paid on time PO Financing gives you the ability to accept and deliver larger orders STAR Funding offers competitive rates and creative PO Funding solutions
Finished Goods Financing
Funding a PO for finished goods is the most common type of purchase order financing. Less risky, it involves the purchase of goods for resale that don’t require any assembly or customization prior to reselling.
Finished Goods Financing is highly preferable to typical short-term loans, as it typically comes with a much more favorable interest rate and turnaround time. This is our most popular type of funding for our manufacturing clients.
Work in Process (WIP) Financing
PO Funding for WIP involves purchasing components or raw materials that must be assembled prior to selling to the end customer. Much more complex than finished goods financing, the risk is much higher. Additionally, the standard costs of work in process PO funding is greater.
However, work in process may not require 100% funding of raw materials, so the costs associated to the invoice may be significantly less than funding 100% of the finished product cost.
Apply for Financing with STAR Funding
If it’s time to start growing your food business and you are looking for capital, STAR Funding can help. Offering the most flexible and cost effective options, our purchase order financing programs make sure your needs are met in a timely and professional manner. As a privately held finance company conveniently located in New York City we are committed to providing same day answers and executing quickly to satisfy the needs of clients. Contact Star Funding today to start financing your food business.