Purchase Order Financing
Purchase order financing is a transaction-based program that can provide up to 100% of the inventory cost to satisfy outstanding purchase orders.
Companies that benefit from purchase order financing range from manufacturers and wholesalers to importers and distributors, whether in a startup mode, experiencing rapid growth, or in a turnaround situation—a common characteristic of each is a need for additional working capital.
Companies in need of purchase order financing face a significant challenge: they have new business but insufficient capital to obtain inventory for new orders. PO financing is particularly helpful for companies that are unable to expand an existing line of credit.
Purchase order financing can solve this dilemma by creating access to new capital. It allows companies to fill orders, generate revenue, and strengthen creditworthiness.
Purchase Order Financing: Quick Facts
What is it?
A specialized form of asset-based lending:
- Transaction-based
- Offers up to 100% of inventory cost to satisfy outstanding purchase orders
- Complements existing financing relationships
Who needs it?
- Any company experiencing cash shortages.
- Manufacturers, wholesalers, importers, distributors, and more. Typically:
- Startup or fast-growing companies, or those in a turnaround mode
- Undercapitalized
- Seasonal or interim financing needs
What are the benefits?
- Increase revenues that might otherwise be lost
- Improve profitability and cash flow
- Enhance existing customer relationships and acquire new customers