| To be a successful scrap metal dealer you must | | | | 1. The scrap metal dealer / trader secures a |
| be able to handle large orders - constantly and | | | | purchase order from a customer |
| consistently. You must be able to pay for the | | | | 2. The purchase order finance company then |
| scrap metal costs in advance (and at the best | | | | pays the scrap metal costs from the supplier |
| prices) and then wait 30 to 60 days until the | | | | yard (usually by placing a deposit or using a letter |
| transaction is settled to get your investment and | | | | of credit) |
| profit back. However, few scrap metal traders | | | | 3. The yard delivers the scrap metal to the |
| can handle many large orders at a time while | | | | customer according to the order |
| waiting 30 to 60 days to get paid. Therein lies the | | | | 4. Once the customer pays for the scrap metal, |
| problem. | | | | the transaction is settled |
| Many dealers try to go to the bank hoping to get | | | | Purchase order financing has a number of |
| business financing. However, they soon discover | | | | advantages over conventional bank financing. First, |
| that most banks don't understand the recycled | | | | it's very easy to obtain. The biggest requirement |
| scrap metal business well and don't have the right | | | | is that your company have purchase orders form |
| solutions for the industry. Furthermore, getting | | | | commercially credit worthy customers. And |
| bank financing is especially hard since banks | | | | second, it can be set up quickly. Most of the |
| require that you show three years of profitable | | | | times you can get the financing in days (rather |
| business history and have sizeable collateral | | | | than months). And as opposed to bank financing, |
| before making a loan. | | | | most startups will qualify. |
| Either way, banks loans don't always work well | | | | Many times, po financing can be used in |
| for scrap metal dealers. In this industry, once you | | | | combination with factoring financing. Combining |
| find the best scrap metal prices, you must move | | | | these two products can allow your business to |
| quickly to seal the deal. A better solution than | | | | fully optimize its cash flow, enabling it to grow at |
| bank financing is to use purchase order financing. | | | | an even faster rate. |
| Purchase order funding provides you with the | | | | Although not widely used, these financing tools |
| necessary funds to execute your confirmed POs. | | | | are quickly being adopted by growth minded |
| It provides you the financing to pay scrap metal | | | | scrap metal dealerships and traders. Be sure to |
| suppliers, enabling you to deliver the goods and | | | | consider them as options the next time your |
| close the sale. Purchase order financing is easy to | | | | company needs financing. |
| use and works as follows: | | | | |