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Article: Unlimited Sales – How Purchase Order Funding Can Help

Do you distribute, resell, or sell wholesale products? If so, you may soon encounter what may be your biggest opportunity to succeed or to fail: your best customer places an unexpected large order. Time is tight, so you have to get the process started – ASAP.

If you manage to pull this off, you can count on additional orders that will help you grow your company. If you don’t pull it off, you can bet your competitors will enjoy winning your customers’ business.

How do you handle large orders?

So, how do you handle an order that is too large for your business? You finance it. Sure, but how? Banks only provide funding to large companies, and you own a small (but growing) business. One alternative is to use purchase order funding.

Let’s look at how transactions work in your business right now – assuming you resell products. Whenever you get a purchase order from a client, you place an order for the product with your supplier. Depending on your supplier relationship, your supplier may offer terms or they may demand immediate payment. Once paid, your supplier delivers the goods. And once your client receives them, they pay 30 to 60 days later. Depending on the timing of things, it may be up to 3 months before you recoup the money. It’s not an easy situation.

Using purchase order funding

And what if you don’t have enough money to pay your supplier? What if your money is tied up with others that still have not paid? That is where purchase order (PO) funding comes into play. PO funding can cover your supplier expenses, allowing suppliers to deliver the goods and enabling you to fulfill large orders.

There are only four major requirements to qualify for PO funding:

  1. You must have a PO from a large, creditworthy commercial customer
  2. Your supplier must have a good track record
  3. Your sales must be final and not guaranteed or consignment sales
  4. Your profit margins must be 25% or higher

If your transaction meets these four criteria, there is a good chance that PO funding can help you.

How does it work?

Most transactions follow a simple flow:

  • You get a large purchase order from a client
  • We issue a payment or payment guarantee (e.g., letter of credit) to your supplier
  • Your supplier drop-ships the order
  • You issue an invoice
  • Once your client pays the invoice, the transaction settles

You can find more details on how a transaction is structured by reading “How does po funding work?

Unlimited sales

An important feature of this program is that your sales capabilities are no longer limited by your financial strength. You can sell as much as you can finance, as long as your transaction meets the funding criteria. As a result, the growth of your company is limited only by your ability to sell good products to good clients – making PO funding an ideal solution for small companies that don’t have much collateral but are entrepreneurially driven to grow.

Get a quote

We are a leading purchase order financing company and can provide you with a competitive proposal. For an instant quote, please fill out this form. To speak with an expert, call us at (877) 300 3258.

Return to the Purchase Order Financing Resource Center.