About Purchase Order Financing
Purchase Order financing (PO Financing) is a great cash flow solution for trading companies which have purchase orders on hand, yet can’t fill due to a lack of funds immediately at their disposal. PO Financing provides wholesalers and importers with the funds to purchase or manufacture goods that have been pre-sold to a credit worthy customer. PO financing is easier to qualify for and results in financing that can cover supply costs and deliver large orders on time.
If the profit margin on your deal is sufficient, PO financing might cover up to 100% of the cost of the product while also in transit. This makes purchasing pre-sold products quick and does not require extending an existing bank line of credit. It also provides additional liquidity thereby encouraging business growth and development.
Both domestic and overseas manufacturers require a letter of credit prior to producing or shipping final product. At Baron Finance, we issue letters of credit, and arrange for all the required quality checks by obtaining product inspections in the countries of origin.
Terms and Definitions
- Letter of Credit
A bank commitment on behalf of a client, paying the named beneficiary an amount of money as agreed upon in their contract
- Invoice Factoring
The sale of accounts receivable invoices at a discounted rate in exchange for immediate cash
- Purchase Order
An official document or form prepared by a buyer for the purpose of purchasing goods or services