What is PO Financing?

Are you a distributor, reseller or wholesaler of goods? As a distributor, your biggest opportunity – getting a very large order – can turn into a major problem if you don’t have the finances to deliver it. Why? Because if you don’t deliver the order, you risk losing your client to your competition.

However, there is a simple way to solve this problem. And, you won’t find it at your local bank. It’s called PO financing. PO financing provides your company with the necessary funding to buy the products from your suppliers, deliver them to your clients and make the sale.

You can use PO funding even if your company doesn’t have commercial credit or a long history of operations. How? By leveraging the purchase order from a strong customer (or the government) as collateral. It’s an ideal tool that can help a business grow past its current financial limitations.

Lets look at a sample purchase order financing transaction. It usually has 6 steps:

You get a PO from your client
The po factoring company pays your suppliers via a bank wire or letter of credit
The order is delivered to your customer, who accepts it
You invoice your client
Your client pays the invoice, concluding the order
The transaction is settled

Although purchase order funding is a great tool for many businesses, it is not for everyone. Given the associated risks, most po financing companies will only finance transactions that:

Sell goods/products that are manufactured by a 3^rd party
Sell goods to reputable clients or government entities
Have profit margins of 25% or more

If you meet these criteria then, PO financing will be able to help you. And an additional benefit of PO financing is that is relatively easy to obtain and can be set up in a week or two.

Interested in an instant purchase order financing quote? Please click here. Prefer to speak to get it by phone? Please call (877) 300 3258 (toll free USA and Canada)

Need more information? Go to the purchase order financing resource center or to the main purchase order financing page.

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Last change 1/1/2008