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What is Purchase Order Financing
- 1. What is Purchase Order Financing? By Factor Finders
- 2. Purchase Order Financing • When different demands stretch your business finances, keeping your company afloat can be extremely difficult. Multiple expenses arise when your clients order goods. Buying materials, as well as manufacturing, packaging and shipping the goods can put a huge strain on your cash flow. Without adequate cash flow on hand, it can be nearly impossible to fill all order requests. Purchase order financing provides a cash advance for the goods your customers have ordered. This way, you can meet production and delivery expenses while waiting for payment.
- 3. P.O. Financing or Bank Financing • Purchase order financing doesn’t come with the red tape and harsh restrictions of bank loans. You can be approved for purchase order financing even if you have less than optimal credit or are a newly launched company. Approval is based on your customers. The bank financing process is lengthy, but purchase orders can get you the funding you need within 3-5 business days. After you’ve been approved for P.O. financing, future funding is available in 24 hours.
- 4. How much funding will I receive? • Purchase order financing enables your company to accept larger orders and increase your profitability. Many types of purchase orders from multiple industries are eligible: Manufacturing Distribution Government Contracting Importers/Exporters And many, many more • You’ll no longer have to turn down business because purchase order financing provides the cash you need to fill orders. P.O. Financing generally advances between 80% - 90% of the confirmed purchase cost to the supplier or issues a letter of credit. You deliver the goods to your customer and the factor company collects payment. Once payment is received, the factor returns the remaining percent to your business, minus a small service fee.
- 5. Are there requirementsfor P.O. Financing? • To begin financing purchase orders, company should meet these requirements: Complete an application and submit the required documents Provide qualified purchase orders or letters of credit Minimum gross profit for transactions should be at least 20%
- 6. How to begin • To begin the P.O. financing process, call Factor Finders today at 1-855-FACTOR-1. You can also request a free quote online at http://www.factorfinders.com/purchase-order-financing.