2. The purchase order finance company handles up to 100% of your supplier payments (by direct payment or letter of credit)
3. The order is fulfilled and the goods are delivered
4. The transaction is settled, once the client pays their invoices
As you can see, purchase order financing allows you to leverage the resources of the financing company and allows you to increase your sales. With PO financing, lack of cash flow will never be a reason to lose a sale.
As opposed to a business loan from a bank, purchase order financing is very easy to obtain and can be set up in days. The main requirement is to have valid orders from good commercial or government clients. Most banks won?t offer this type of financing, but you can get it from a factoring company. As a matter of fact, purchase order financing and invoice factoring are frequently combined to help reduce the costs of the transaction.
So, if your purchase orders are piling up, be sure to consider financing with purchase order funding.