Purchase Order Financing

How It Works —

The financier provides funding for you to fund all or part of a customer’s purchase order. The customer will make payment directly to the financing company. After taking their fees, the financier will pass the remaining amount of the customer payment to you.

Example —

You have a large order from a large retailer, but you don’t have the $500k to fulfill it. The financier pays the supplier, and the supplier sends the products to the customer. You invoice the customer, and the customer sends the payment directly to the financier. After taking 5% of the customer payment, the rest of the balance goes to your business.

You Might Be A Fit If —

• You sell your product wholesale or to retailers.
• Your largest bottleneck in the business to take advantage of demand from distributors is cash for inventory.
• You have dependable customers that are likely to pay in full.

Why You Would Use This —

• Your purchase orders are from dependable distributors but you don’t have the cash flow to meet demand.

• You need to finance light manufacturing or assembly.

What TO WATCH OUT FOR —

• This financing will only support the production of the products and not other expenses that you might have. 

  • You can take advantage of large production runs when you don’t have cash. 

• PO financing is for a large purchase order and may not help you with smaller distributors. 

  • Not only helps with significant cash expenditures but also offloads payment collection.

• The fees associated with factoring can be quite expensive if used on every customer invoice. 

  • You only have to finance the purchase orders that you choose to send to the capital provider.