Purchase order financing demand could rise as the U.S. economy expands

With the U.S. economy expected to grow in the second half of 2013, small- to medium-sized manufacturers and wholesalers could begin to see orders larger than they usually handle. 

As a result, purchase order financing demand could rise, as these businesses may need to rely on financial assistance to be able to fill these orders. 

The Conference Board Leading Economic Index for the U.S. was unchanged in June, at 95.3, but the outlook for the future was improved. 

"The U.S. LEI was flat in June," said Ataman Ozyildirim, economist at The Conference Board. "Declines in building permits, new orders and stock prices were offset by gains in consumer expectations, initial claims for unemployment insurance, and other financial indicators. However, the LEI's six-month growth rate remains positive, suggesting the economy will continue expanding through the end of the year."

Privately-owned companies optimistic about the economy
Another positive sign for the economy is the fact that more privately-owned businesses are feeling confident in the future. 

According to PwC US's Private Company Trendsetter Barometer, 59 percent of private companies were optimistic about the future of the economy, up nine points from the previous quarter and 17 points from the final quarter of 2012. Additionally, this was the highest percentage since the recession ended. 

Two-thirds of private-company executives said the economy is growing, and projected 2.2 percent growth by the end of the second quarter of 2014. 

"The steady climb of private companies' optimism is a positive break from the fluctuations in confidence we're used to seeing," said Ken Esch, a partner with PwC's Private Company Services practice. "As momentum builds around optimism in the US economy, we're finding that this translates into more companies looking to reinvest in their growth plans."

Purchase order financing demand could rise with the economy expected to grow
Should economic growth accelerate in the second half of the year, an increasing number of small businesses might need to turn to purchase order financing. 

As the economy expands, small- to medium-sized manufacturers and wholesalers could start to see additional business in the form of large orders. Oftentimes, companies of this size can't fill these orders on their own and are forced to turn to some form of financial assistance. 

If turned away by a bank, these businesses can utilize purchase order financing, which allows them to obtain up to 100 percent of the funds needed to fill an order.