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Purchase Order Financing

Purchase order financing programs provide a short-term solution for funding the inventory required to complete sales transactions. It is ideal for companies where:

1. Growth has outpaced capital
2. Seasonality has strained cash flow
3. Vendors won't extend credit

PO financing can be easy to qualify for and can be setup quickly. The most important criteria is that you have an order from a creditworthy client.

Purchase order financing or ‘PO Funding’ is a tool that wholesalers, resellers, and distributors can use to finance large orders that they cannot handle on their own. This helps the business capitalize on the big order and prevent having to concede the business to a competitor.

PO financing works as follows:

A client receives a purchase order and submits it to the PO finance company. The PO finance company then pays the supplier directly will provide funding directly. When the goods are received and delivered to the end client an invoice is generated. The invoice is paid within 30 days of receipt and the finance company recovers its funding directly from the client. All the remaining cash is profit for your business. PO financing provides businesses with the ability to accept projects that they would otherwise be unable to handle.

Purchase order funding is perfect for small businesses because it allows them to take on bigger projects than they might otherwise have the resources to handle. PO funding will facilitate growth and lead to increased profits.

PO financing is also a way to receive funding when other methods are not available. If a business is too small or does not have the required credit for a bank loan, purchase order funding is a way to receive financing on the basis of your customer’s credit. This may be an attractive option for businesses that work with large, established companies or a government agencies or municipalities.

Purchase order funding is a unique form of financing. Some PO funding arrangements are one time deals, other deals may be recurring. Purchase order financing often occurs in the fields of construction, manufacturing, real estate, and even financial assets. Factor Direct Capital is an expert on purchase order financing in Los Angeles and throughout California and can explore any purchase order financing opportunities.