The Advantages of “One Stop” Purchase Order and Accounts Receivables Funding

One-Stop PO Funding & Accounts Receivables Funding

A Well-Established Process of PO Funding & Invoice Factoring:

• A transaction starts with a “Purchase Order,” an electronic or paper document that the buyer issue. The PO details the amount and specifications of goods that the buyer will purchase.
• The Seller accepts the purchase order and completes work on the requested goods
• Upon delivery, the Seller sends an invoice to the Buyer detailing the amount owed and requested payment terms
• The transaction is complete after payment

Financing is available throughout the transaction cycle. Through Purchase Order Finance (“PO Funding”) a commercial finance company helps Sellers source supplies and materials necessary to fulfill an order. Later, once a shipment is complete, commercial finance companies provide funding against invoices (“Invoice Financing” or “Invoice Factoring”). Use this capital for payroll, further purchases, enterprise expansion, or to meet any other general business need. Rather than look “piecemeal” for funding solutions, businesses can benefit significantly by using a “one-stop” approach to financing throughout the transaction cycle.

Benefits of Combining Purchase Order Funding and Invoice Factoring with One Lender:

• Harmonizes financing available throughout the production cycle
• Ensures capital doesn’t become idle or “trapped” moving from one lender to repay another
• Ease of administration
• Consistent, consolidated lender reporting
• Helps build a relationship between business and lender

How Purchase Order Financing Works:

• Companies can receive up to 100% financing for the fulfillment of customer orders
  1. the financial strength of the customer placing the order
  2. the gross margin embedded in the proposed transaction (generally required to be at least 15%)
  3. the strength of any relationship that may exist between the business and the customer, Lenders adjudicate an opportunity based on specific vital considerations
  4. ease of doing business with the supplier
• Funds can only be for purposes of sourcing the order
• The purchase order lender pays the supplier directly
• Shipment of goods is generally direct from the supplier to the end customer