Purchase order financing (or PO Funding) is a short-term commercial finance option that provides capital to pay suppliers upfront so your company doesn’t have to deplete cash reserves. Here is a representative scenario:
A business has a solid purchase order ready to fulfill, but not the funds to pay its suppliers upfront; nor is the bank willing to extend the amount of credit that would be required. Using a purchase order finance company, the suppliers are paid directly usually via a letter of credit. The business fulfills the order; with proceeds arriving after shipment is received.
Who uses it and why?
Purchase order financing is designed for growing businesses with little access to working capital and/or poor cash flow. The type of business that qualifies is usually a producer, distributor, wholesaler or reseller of manufactured products.
If your company finally landed that dream order, but there’s not access to the capital needed to make it happen - you should consider purchase order financing. Learn more by reviewing our PO Finance case studies or feel free to give us a call to discuss your opportunity.