Purchase-Order Financing
Merchants Business Credit offers some of the most flexible purchase-order financing programs anywhere. In addition, by combining this form of financing with that of accounts receivable financing, clients can formulate a total cash flow solution.
Purchase-order financing is a form of short-term financing and is usually used by businesses that have a large order in place but lack the working capital to fulfill it. By applying for this type of financing, a business can acquire the capital it needs on short notice and use it to pay for inventory, labor, shipping and handling, and other related costs. Once the business delivers the finished goods and is paid by the buyer it uses part of the proceeds to pay off the balance of the purchase-order financing.
Importers, exporters, manufacturers and wholesalers are usually the type of businesses that will seek this type of financing. Its cost – like that of other forms of financing – varies with transaction size, frequency, the credit-worthiness of the buyer, and the overall risk associated with the transaction.
There are four keys to this type of financing:
1. the credit-worthiness of the buyer
2. the experience level of the business seeking assistance with the financing
3. the ability of the suppliers to provide the ‘raw goods'
4. the profitability of the transaction
It should be noted, though, that purchase-order financing is usually used along-side accounts receivable financing. The reason for this is that the lending institution who is providing the purchase-order financing wants to assure itself of getting paid as soon as possible.
Benefits
 No need to take on additional debt.
No need to give up business ownership.
Obtain funding within 24 to 48 hours.
C and D credit acceptable.
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