Americans continue to remain cautiously optimistic about the economy, but there have been signs of improvement in the past month.
If economic growth accelerates, manufacturers could see additional business. In some cases, they might even receive larger orders than they usually handle. For smaller companies, orders of this size can be difficult to handle, even with an improving economy, but purchase order financing could enable a manufacturer to take on this challenge.
According to The Harris Poll, 29 percent of Americans surveyed in April expect the economy to improve in the coming year, while 41 percent said it would stay the same, relatively unchanged from the previous month.
Despite the unchanged sentiment, there have been numerous signs of improvement in the economy.
For example, the employment situation has shown great strides in the past couple months. According to the U.S. Department of Labor, the economy added 165,000 jobs in April, bringing down the unemployment rate to 7.5 percent.
Meanwhile, initial jobless claims recently hit a five-year low in the week ending May 4, falling by 4,000 applications to 323,000.
"There is only so much companies can cut layoffs before they have to start thinking about adding to head counts," Guy Berger, economist at RBS Securities, told Bloomberg. "The longer this continues, the more likely companies will have to add to head counts."
If the economy does, in fact, begin to grow at a faster pace, small-to-medium-sized manufacturers might need to opt for purchase order financing to handle additional business. In certain instances, companies of this size can struggle to fill an order larger than they usually handle.
However, purchase order financing can provide a manufacturer with 100 percent of the funds needed to fill such an order, which allows them to avoid having to sell any equity.