When a business receives a purchase order for a product or contract for a service, the business often needs money in advance to produce the product or service that has been ordered. In some cases, cash can be advanced on a purchase order, allowing the business to receive the raw materials they need to fulfill the order and deliver the product or service.
Purchase order transactions (Trade Financing) are distinct from factoring of receivables transactions. Purchase orders are simply a promise to purchase goods rather than an invoice for goods already delivered. In that respect, Purchase Order Financing is somewhat more risky to the investor and is available only to qualified customers.
Our Funders can finance purchase orders for all types of transactions that include:
Every purchase order transaction stands on its own. We look at your business history, the credit worthiness of the buyer, the ability of your supplier to produce the goods, and if the transaction is profitable for all parties. Finished goods are easier to finance than non finished goods.
In order to consider P.O. Financing for your firm we will need:
Generally we charge 5% (sometimes more, sometimes less) one time fee for purchase order funding on the gross amount to be paid by the buyer. Sometimes there may be an additional interest charge on the money advanced if the purchase order takes greater than 30 days to complete. Every purchase order pricing is individual and unique. This purchase order fee does not include the factoring fee which may cost an additional 3% to 6% if you are factoring the receivable. We will consider financing a purchase order transaction to be paid out by another factor or lender. To find out more about Factoring Fees click here.
In order to see if the transaction will make money for both parties, please fill out the worksheet section of the application form. As you can see the total cost of purchase order financing fee and factoring fee can range from 8 to 11%. Since both of us need to make money, the gross margin should be greater than 18%.
Please contact us today at 847-224-3817 or e-mail your completed worksheet and form for us to see if the transaction meets our financial criteria. Please note who the buyers of the goods are and your history with the suppliers. Indicate if you must take possession of the goods.
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