There is a general misunderstanding of Purchase Order Financing. Let us discuss whether it is applicable to your situation. Also, on what you can do to qualify for Purchase Order Financing or PO Funding.
You should distribute or wholesale a product
Purchase Order Financing is designed to either buy the goods for you or give your vendor confidence that they will receive a payment if they perform properly. A PO Funder can write a letter of credit payable to your supplier or they can give your supplier a Vendor Guarantee. Such vendor guarantee stating that if they live up to the quality, quantity and timeliness standards of your purchase order back to them.
There are not a lot of steps in your products
PO Funding is primarily designed for products who stay in about the same state from when you buy it to when you sell it. If your product requires many production steps or multiple vendors there is a financial product call Production Finance. It is more akin to Asset Based Lending. If this describes your situation reach out us via a call to (866)598-4295 or email us at firstname.lastname@example.org.
Gross Margins of 25%+
Your markup has to be high enough to cover your overhead, freight, PO Funding costs and most importantly, profit. That old joke that we “lose money on every transaction but make it up in volume” comes into play here. We want you to grow and prosper and you can only do so if you have enough gross margin to work with. Do your homework and make a spreadsheet with all your costs. We can help with this exercise.
Big Order or Hyper Growth is Not a Problem
A plus of Purchase Order Financing is that it was designed to take your business to the next level. For instance, your typical order is $50,000 and you have the opportunity to fulfill a $250,000 order. This is what Purchase Order Financing, PO Finding, Inventory lines of credit or Supplier Financing was designed for. We can also help with the increased logistic burden on your business of warehousing, freight, and insurance. Because of our expertise in funding and moving goods, we can introduce you to the right experts. We can also provide specialized transaction management assistance and expert advice on managing cash flow funding.
To summarize, we love doing off-balance-sheet purchase order financing to importers and exporters serving a range of industries. We have substantial experience with products of all types.
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