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When a business finds itself in the position of not being able to promptly fill a customer's purchase orders, it can be in real danger of losing those orders and the potential profit they represent. Worse yet, is the potential loss of any future orders from that customer. Typically, Trade Financing and Purchase Order Funding is more expensive than factoring invoices. This is an alternative for businesses who are start-ups, companies less than 2 years old, and companies with the opportunity to grow. The new company can avoid being burdened with debt with a loan, and does not have to give up equity for Venture Capital money. The funding source looks to the credit worthiness of the customer placing the Purchase Order This does not have to be the same source as the Factor, if the company is already factoring. They are used to working together. Our Purchase Order funding sources will advance the actual funds necessary to fill orders, and/or fund payrolls. Also, this can be direct payments to 3rd party suppliers (raw materials) or Lines of Credit. Purchase Order Funding is available in virtually any industry. Contact us for further information on Construction Factoring Contracts. In practice, as soon as the purchase order is shipped and an invoice is generated, then the investor factors the invoice and uses the initial payment to retire the purchase order advance and fee, with the overage going to the client. Obviously, the second payment on the factoring will make up the balance of the profit for the purchase order-financing client. |
