Purchase Order Financing Helping Importers and Resellers That Can’t Get A Letter Of Credit
(PRLEAP.COM) Miami, Florida – Importers and resellers that can’t get a letter of credit can now use purchase order financing to help pay their suppliers. Purchase order funding is helping them deliver existing orders and take on new and larger orders, confidently.
PO financing is a tool that enables companies to get financing using their purchase orders from clients as collateral. The factoring company handles all supplier payments, usually by letter of credit, and the transaction remains open until the end customer pays their invoice. Once the customer pays the invoice, the transaction is settled.
One of the biggest challenges for importers and resellers is that transactions last a long time. Suppliers usually take 30 to 60 days to deliver their products, and customers take an additional month or two to pay after delivery. This means that four or more months can go by before the importer or reseller gets any payment. On top of that, they must pay suppliers, rent and payroll regularly to keep operating. Unless the company has a significant financial wherewithal, the numbers just don’t add up.
“Importers and resellers usually have tremendous financial pressures,” said Marco Terry, president of Commercial Capital LLC. “Purchase order financing alleviates the pressures by handling all supplier payments and financing the transaction until the end customer pays. This enables companies to grow beyond their seemingly available means.”
One of the biggest advantages of po funding (especially when combines with invoice factoring financing) is that it can help companies fulfill very large orders without using much or any of their capital. This makes it an ideal product for new or rapidly growing businesses.
Purchase order financing is part of the trade financing suite of services, which includes export factoring and import export finance.