According to Dictionary.com the word "easy" is defined as having 17 different definitions. The most pertinent definitions are:

"1. Not hard or difficult; 6. Not burdensome or oppressive; 7. Not difficult to influence or overcome; 11. Not tight or constricting; 14. In commerce it means not difficult to obtain." In this article, the term "easy money" is meant to convey the notion that, notwithstanding these very difficult times in 2008 , when money is scarce and difficult to obtain, under certain circumstances , a business that sells products to other companies can easily get money to expand exponentially. get purchase order finance

On the planet, humans have not invented money for many thousands of years. As the nation states and civilizations evolved, people learned to trade and barter for goods that they needed. Money was invented to solve the issues of bartering. It was mostly a problem with timing farmers, for example, with a crop they could exchange for their desired goods as they required it. The invention and acceptance of gold and silver coins helped in overcoming this issue of timing. The farmer could trade in his crops for gold and trade gold whenever needed, to purchase the other things they required.

Paper money was developed to satisfy a myriad of reasons including the most important of which is the burden of carrying a large quantity of silver or gold. Paper money is much easier to conceal. Prior to the early 1900's in the United States paper money could actually be redeemed for gold. During the Great Depression, President Roosevelt in 1933 passed laws outlawing the possession of more than $100 of gold by individuals. By the turn of the century then, that was when the U.S. government discovered easy money. Not shackled by the requirement for physical gold reserves the government printing presses churned out however much money as they needed. The politicians came up with schemes that included the sale of bonds issued by the government and loans from the government of all kinds, and control of the money supply through the twelve local Federal Reserve Banks to manage the country's economy as well as its money supply.

Our government's easy money in fact , is costing each American an extremely high cost. The world economy has realized that our currency has less value as a result, we pay higher for imports such as gasoline, clothing and food. In the event that we travel abroad, to Europe for instance and find that it takes about one and one-half U.S. dollars to purchase just one Euro, the currency of Europe. It is true that European hotels as well as restaurants, products and services are priced fifty percent higher for Americans due to the weakness in the dollar. Ironically, U.S. musicians make more money in Europe than they would in America due to the fact that it is cheaper for them to be paid "in dollars". In spite of this , many U.S. businesses are innovative, creative and ready to grow at a very rapid pace. Purchase Order Financing can be an affordable solution to fast growth needs.

What is the reason it works? Purchase order financing solves the issue of timing to pay a supplier for goods before the buyer is able to pay the seller for the product , similar to how paper money and gold solved the barter timing mismatch problem. An example of this in the real world is the story of a company that developed popular products for cats and dogs. Most of their customers were small-scale stores. Then one day they received a huge purchase from a major box retailer that could nearly triple their revenue on a monthly basis. The company did not have sufficient cash to meet the order. Purchase order financing offered how to address their liquidity problem to cover the cost of the manufacturing of the products and get the goods shipped into the giant box customer.

How does it work? A letter of credit is given to the manufacturer to ensure that the payment is made. The costs of goods are returned to the maker when the products are delivered, as in the case above, to a big box store. A financing arrangement for account receivables can be used to fund the purchase order and the letter of credit portion of the purchase. When the buyer pays for the accounts receivable, the loaner, generally a finance company or bank affiliated company, gets made payable in accordance with the contract and the profits are rebated back to the buyer. purchase order finance south africa

What is the reason it is easy to raise money? Because the credit of the seller isn't the only factor that determines the loan; instead, the purchase credit can be used by the purchaser to support the financing. Still the buyer's character and knowledge are vital for lenders. During the due diligence procedure, lenders need to determine that no prior UCC-1 lien have been filed against the business. If there are significant problems with credit, such as bankruptcy, approval from a bankruptcy court for the debtor in possession will be required. Such situations will not normally be approved by an Bank however the financing is relatively simple to obtain if the circumstances are. It is also available for the capital is virtually unlimited. As the company expands, so to will the finance facility grow so long as the purchase orders originate from reliable, creditworthy businesses.