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Purchase Order Financing – A Brief And Practical Insight

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					        Purchase Order Financing – A Brief And Practical Insight

“Purchase order financing can be the right tool and good financing solution for all the
small and medium sized business. Read on the article and get a clear insight on the
whole matter.”



Purchase order financing is a special kind of tool that lets you finance your
large orders. It offers the needed funding to carry out the orders that
somehow you could not be able to deliver because of fund crunch. Unlike
traditional banking finance, PO financing is easy to qualify for and can be set
up pretty quickly. What is so good about it is that it doesn’t depend upon
your company’s financial power; rather it ropes upon the customer’s
financial strength. Hence, if you vend your products to big firms or to
government entities, PO financing can undoubtedly be the best bet to get
those sales financed. However, it should be kept in mind that PO financing
doesn’t work for every company until and unless you have at least 20% of
good paying customers.

Advantages of purchase order financing

Purchase order financing is a special type of financing choice that lets you
receive the purchase orders irrespective of the availability of the current
capital. It serves as a perfect tool for those companies or organizations that
have worn out their accessible funds or banking options.

Purchase order financing allows you to fund almost maximum of your
supplier costs, letting you to offer extra orders. Moreover PO financing has
got no such arbitrary limits such as bank funding and this gets directly
attached to your sales. It shows that in order to get additional financing all
one needs to do is to receive orders from good business or government
clients.

PO funding seems to be the perfect tool for organizations that vend 3rd party
products which includes resellers, distributors and wholesalers.
Purchase Order Financing- Necessary Qualification Criteria

In order to get qualified for purchase order financing, a company has to
meet up certain criterion. To qualify a company has to be a re-seller of
product or distributor who will only buy the products from supplying agent
followed by transporting the same to the customers or clients. The company
must have commercial or government clients and should have a minimum of
$50,000 in monthly sales. Apart from this, a company’s gross transaction
must bear a gross profit of 20%

Qualifying for PO funding is simple and quick

Purchasing order financing is straightforward and easy to use. In order to
qualify for the same one needs to sell the products to other businesses like
government agencies who meet the payment procedure in 3 months or less.
The financing company purchases the products straight from the suppliers
against your name, by a letter of credit. It then assures that the products
are rightly delivered to your customers. So, once the order gets approved
and delivered by your clients, the funds against the letter of credit are given
to the supplier. The moment an invoice is rewarded, the transaction between
the parties gets settled. It is natural to merge PO financing with accounts
receivable financing as this lets you reduce the entire transaction cost easily.

So, if you are seeking fort an ideal financing solution for your small or
medium sized business, Purchase order financing can be the best bet.

Baron has been associated to a factoring or purchase order financing
company for long years. He believes it is natural to merge PO financing with
accounts receivable financing as this lets you reduce the entire transaction
cost easily.

				
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Description: Purchase order financing can be the right tool and good financing solution for all the small and medium sized business. Read on the article and get a clear insight on the whole matter.