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Purchase Order Financing

What is Purchase Order Financing?

Purchase Order Financing is short term funding used to finance the purchase or manufacture of specific goods that have been pre-sold by the client to its credit worthy end customer. Funding entails issuing letters of credit or providing funds that allow clients to secure the inventory they need to fulfill customers orders.

Purchase Order Funding

Purchase Order Funding can be used by Manufacturers, Importers, Exporters, or Distributors for:

 Issuing Letters of Credit
 Payment to third party suppliers for finished goods
 Raw Materials  Labor  Shipping, Packaging, Inspections, etc.

PO Financing

Primary Reasons Why Companies Utilize PO Financing


Company has solid export / import or domestic sales but does not have the working capital to complete the transaction or continue to grow.

Company doesn't have the expertise and experience to structure and complete the import or export properly. Even established international clients will use our expertise to make a transaction safer.

Client and/or client's vendor (on exports) transfer to lender the risk of payment by the foreign buyer.

Lender provides working capital where banks can not because the company's balance sheet or collateral will not support sufficient borrowing. An equity placement would force the owners to give away a high percentage of the company.

  5   TIMING
Often clients need a quick response in order to get or keep a sale. Our lender can quickly do its due diligence and review the facts of the transaction. There are no committees, lawyers or other elements that slow the decision process down.

Clients can grow more quickly by having the capital available to do more business. Clients brokering goods can become principals thus increasing their margins. Our clients can expand their margins, save on various costs and increase supplier credit extended to them.

Our clients that are middlemen need transactions secured in such a way that the end buyer and manufacturer do not become acquainted. In these situations the end buyer typically issues a letter of credit to our client, and we issue a letter of credit to the manufacturer.

If desired, our lender, to a great extent, become the international operations area for a company, thereby allowing a cost savings and providing expertise to international transactions.

The Benefits of Purchase Order Funding Include the Following:

Business Financing  Allows companies to grow without increased bank debt!

Business Financing  Helps ensure timely deliveries to customers!

Business Financing  Increase market share!

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