Purchase Order Financing (PO Loans)

Are your sales outpacing your incoming cash flow?

Purchase order loans advance payment on your behalf to buy or produce the goods needed to fulfill an order. Purchase order loans, purchase order funding, and production/pre-delivery financing are all the same service.

What is Purchase Order Financing?

what is purchase order financing

Purchase order financing provides short-term financing, advance payment, and assurance to a supplier so you can obtain and deliver on goods ordered or sold.

A purchase order loan tells a supplier that a buyer, middleman, or end-user has purchased a product from you and that you, the seller, have the funds to pay for it.

Uncertain cash flow is a common problem for product manufacturers and wholesalers.

Purchase order funding provides cash and the proof of ability to pay suppliers so you can procure materials for manufacture or resale products.

A purchase order loan bridges the gap between sale and payment and has the advantage of being faster and easier to obtain than a traditional bank loan, especially with today’s more stringent loan requirements. Approval for a purchase order loan is largely based on the creditworthiness of your buyer. Your direct personal or business credit rating is not a major factor. Factor Funding takes on all the risk.

How Does Purchase Order Financing Work?

A purchase order (PO) is a request from a buyer to a seller for a tangible product. A typical purchase order lists the amount of goods needed and the terms and conditions of delivery and payment.

When a business receives an order for a product, it instructs its resources to fill the order. Occasionally, a business may be in a position where it is unable to fulfill a buyer’s order because it lacks materials or the cash to acquire them.

When this happens, the business risks losing both the order and the customer. A purchase order funding program can tide you over.

purchase order financing

Our clients use purchase order funding as a source of capital, assurance, or guarantee that comes as a:

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Check, in advance if backed by accounts receivables

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Bank transfer, in advance if backed by accounts receivables

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Letter of credit (LOC), based on type and conditions

With purchase order financing, a company has funds to acquire materials or finished goods and fulfill the buyer’s order, as long as there is sufficient margin to accommodate the costs of funding as well as make a profit.

A purchase order loan pays up to 100% of the cost of goods or 70% of the purchase order value.

Purchase Order Financing Process

Getting purchase order funding is really quite simple.

step 1

You receive a purchase order (PO) from a buyer for product.

step 2

You apply to a company, like Factor Funding, to qualify for a purchase order loan.

step 3

Upon acceptance, usually within 24 to 48 hours, you send your customer’s PO to the funding company.

step 4

Factor Funding advances a portion of the value of the PO as a check or bank transfer, or as a letter of credit (LOC).

step 5

You use the funds or assurance of financial ability to purchase materials or products from your supplier.

step 6

Factor Funding collects the invoice and payment from your customer.

step 7

Factor Funding forwards the balance of your profits, minus a fee to you.

step verified

Once you have qualified for our service, your next purchase order loan will be available even faster.

REQUIREMENTS FOR

Purchase Order Funding

The purchase order (PO) must be:

For pre-sold, tangible products

PO loans tend to be short term and somewhat more expensive than traditional financing, but make up for this by being easier to obtain. Purchase order financing is perfect for startups and small to mid-sizes businesses selling products that meet the requirements listed.

For non-consignment sale

PO loans tend to be short term and somewhat more expensive than traditional financing, but make up for this by being easier to obtain. Purchase order financing is perfect for startups and small businesses selling products that meet the requirements listed.

Non-cancellable

PO loans tend to be short term and somewhat more expensive than traditional financing, but make up for this by being easier to obtain. Purchase order financing is perfect for startups and small businesses selling products that meet the requirements listed.

Issued by a legally registered and credit-worthy buyer or payer

PO loans tend to be short term and somewhat more expensive than traditional financing, but make up for this by being easier to obtain. Purchase order financing is perfect for startups and small businesses selling products that meet the requirements listed.

For finished goods (preferably)

A purchase order loan pays up to 100% of the cost of goods or 70% of the purchase order value.

For a product available for resale on the open market, in case of recovery

PO loans tend to be short term and somewhat more expensive than traditional financing, but make up for this by being easier to obtain. Purchase order financing is perfect for startups and small businesses selling products that meet the requirements listed.

For guaranteed payment or assurance to be issued directly to suppliers on your behalf

A purchase order loan pays up to 100% of the cost of goods or 70% of the purchase order value.

PO loans tend to be short term and somewhat more expensive than traditional financing, but make up for this by being easier to obtain. Purchase order financing is perfect for startups and small businesses selling products that meet the requirements listed.

Some purchase order financing companies only offer a letter of credit. At Factor Funding, we also offer the alternative of cash payments, check, or bank transfer.

PO Financing Required Documentation
purchase order financing documentation

To complete the PO financing loan application, we may ask for some or all of the following:

  • Copies of Articles of Incorporation and By-Laws
  • Copy of Fictitious Name Filing (if applicable)
  • Copy of Partnership Agreement (if applicable)
  • Financial statements
    Schedule of aged accounts receivable
  • Copy of 941 withholding tax filings and proof of payment

Purchase Order Financing

for Small to Mid-Sized Businesses

Who uses purchase order financing? Some business leaders who benefit from purchase order loans include:

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Importers
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Exporters
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Wholesalers
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Assemblers
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Distributors
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Manufacturers

…with rapidly growing sales, capital constraints, seasonal sales spikes, high development costs, volatile sales, new product launches, or other situations where they are strapped for cash.

BENEFITS OF PURCHASE ORDER FINANCING

—Especially with Factor Funding
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Reduce your credit risk and grow your business

Don’t try to float debt on credit cards or consider other creative financing solutions that could risk your credit. Contact Factor Funding today to learn how to reduce your credit risk and grow your business through our purchase order funding program.

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Years of experience

Factor Funding has been around for 20 years. We provide purchase order loans and other short-term funding and business services throughout the United States.

GET IN TOUCH WITH FACTOR FUNDING

to Get Started with Purchase Order Financing

What better way to get the peace of mind you need about your business funding than from an expert with years of experience helping countless others in exactly the same way? Reach out for assistance to ensure that your feeling of being in a rut over financing doesn’t last long. We get companies the quick cash they need to get things done in the here and now.

Waiting around won’t get you to the next level and help you reach goals you know your business is destined to achieve. We look forward to chatting about your business needs and how we might be able to partner with you for growth to skyrocket. Here’s to your success!



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