Purchase Order financing and 2006

I hate to make predictions. The reason I hate making predictions is that I am right only half the times. The other times, I am usually wrong. Basically I am no better than a coin toss. If you would like to read about my predictions on invoice factoring go to the invoice factoring blog.

I am about to make a prediction about the purchase order financing market. Lets look at some trends that may affect small and mid size businesses:

1. Banks are lending less money to businesses. This came out in an October Business Week magazine. Basically, banks are focusing on other profit generating activities.

2. The real estate boom is loosing traction. This is critical, because many business owners use their home equity to finance ongoing ventures.

3. More and more businesses are demanding extended payment terms. Meaning, they pay in 45, 60 or even 80 days.

These variables will always create cash crunches in small businesses probably, the market for alternative financing will go up. These means that invoice factoring companies and purchase order financing companies will probably book more deals.