Purchase Order Financing
Easy as 1, 2, 3
Get the funding you need for supplies, staff and other costs – as soon as you get the order.
1
Fast
Rapid access to funding
Competitive rates
Individually agreed arrangements
The SMME can use the money for processing the order purpose
2
Supports cashflow
Advance repaid when payment received from the customer
Adverse credit – no problem
No capital costs
Reduced demand on cashflow
3
Supports growth
Ideal for growing businesses
Funds to pay suppliers
Funds to pay the workforce
Reduces burden from slow – paying customers
We know that is growing fast or large orders, it can mean cash flow problems. We know the lenders who can help with funding that keep pace with every order you receive.
Understand Purchase Order Finance
Purchase Order Financing
Purchase Order Financing can provide the solution. As its name suggests, it is a form of finance secured on a purchase order, the agreement issued by a buyer to a company setting out the prices and quantities for a product or service when they are ready to buy.
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Securing a significant order, supported by paperwork in the form of a purchase order, is a major plus – but it can mean challenges for your business:
- First, your business needs to pay its suppliers before it can produce the goods to fulfil the order.
- Second, depending on the business sector, the customer may have lengthy payment terms, in some cases up to 120 days.
Paying the supplier and waiting for the customer’s payment can mean a cash flow problem for the business. They need substantial finance to cover the period from receiving the order until they get paid by the customer.
Purchase Order Finance, or ‘PO Finance’, provides funding for businesses to pay their suppliers and smooth out cash flow. It is a form of cash advance secured against a confirmed Purchase Order.
How Purchase Order Finance works...
With Purchase Order Finance, the finance company will first need to see a confirmed Purchase Order form a relatively well established and financially secure customer. They will want to ensure that your buyer is really in a position to pay for the goods once they have been completed.
They will then make a cash advance to your business, which will allow you to buy in supplies and deal with other costs. The funding level will depend upon your business sector, the value of the order and the expenses you face, and your customer’s strength, the company issuing the Purchase Order. This advance may not be for the entire order, although some arrangements may provide a high percentage of the total value.
Once work is complete, the Purchase Order Finance company will collect the payment form your end customer. They will then deduct their fees in return for the facility, which will be made up of interest and a charge for the transaction, and transfer the remainder to you.
Alternatively, you can allow the Purchase Order financing company to open up a line of credit with your supplier. The credit line will be opened in their name and backed by them, allowing new businesses and those with a poor credit record to get the supplies they need.
Any business that is growing fast or which has secured a large order can face cashflow problems. The cash may not be there to do the work.
Real Examples of
What We Can Do
Sectors We Serve
Government Tenders
Corporate Sector
RFQ Funding
PO Financing includes collections.
The Purchase Order Finance company will not only advance you the money, but they will also collect payment from your client. This eases your administrative burdens, freeing your team for productive work.
- Its lets you target larger customers and take on larger orders safe in the knowledge you can call on the finance you need.
- You don’t need an established credit record – with a confirmed order from an appropriate customer, typically, no additional security is required
- You can negotiate better deals with your suppliers, as you can be a cash purchaser.
- You can preserve your working capital.
- You can support your growth plans and target larger customers.
Real Examples of
What We Can Do