The past couple months have been strong for the economy, which could provide a boost to the purchase order financing market. In fact, U.S. gross domestic product grew at a faster than expected pace in the second quarter.
As the economy picks up steam, small- and medium-sized manufacturers and wholesalers could begin to see orders larger than usually handled. To successfully fill them, purchase order financing can be utilized.
The U.S. economy grew faster than expected between April and June, with GDP rising at a 2.5 percent annual rate, according to the U.S. Department of Commerce.
Many experts feared the economy could suffer as a result of higher income taxes and the federal sequestration, but that hasn't been the case.
"The economy is doing fine," Brian Jones, senior U.S. economist at Societe Generale, told Bloomberg. "It is going to weather the sequestration. Growth will accelerate in the second half of the year."
Strengthening jobs market fueling economic growth
Part of the reason the economy has been able to weather the storm is the strong employment situation, which has continued to show improvement in August.
First-time applications for unemployment benefits totaled 331,000 in the week ending August 24, down from 337,000 in the previous seven-day period, according to the U.S. Department of Labor. Economists surveyed by Bloomberg called for a drop to 332,000 claims.
"The trend remains very encouraging," Ryan Sweet, senior economist at Moody's Analytics Inc, told Bloomberg. "It suggests the job market is strengthening."
Purchase order financing demand may rise with growing economy
As the U.S. economy sees accelerated growth, small- and medium-sized manufacturers and wholesalers may begin to receive potential game-changing orders from big-box retailers, such as Target and Walmart.
While such large orders could be great for a small businesses, they can often be difficult to fund. Fortunately, purchase order financing is available to provide assistance. This type of lending agreement enables manufacturers and wholesalers to obtain up to 100 percent of the funds needed to fill an order.
One of the major benefits of purchase order financing is that it allows owners of these companies to retain full equity, as they aren't forced to sell part of their business to finance an order. Additionally, it gives manufacturers and wholesalers the opportunity to do business with big stores like Walmart without tying up too much available capital.