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What is Purchase Order Finance?
A
purchase order
is a document sent to a supplier or vendor, which authorizes the
shipment of goods to the customer (issuer) at a specified price and
terms. A purchase order creates a legally binding contract which cannot
be changed without the consent of both parties.
While purchase orders
themselves require no financing, periodically, purchase orders are of
such size and "out of the norm" for a business owner that special
financing is required. This is especially true when the actual
manufacturing is to be done offshore and the foreign
factory requires a significant amount of "mobilization money to begin
the manufacturing process.
At
Sacramento Factors.com,
we can assist business owners with their purchase order financing needs
for orders in excess of $50,000 and where the issuer is a recognized,
creditworthy customer. This includes international and
cross-border transactions as well as domestic.
To find out more and to explore the possibilities of purchase order
finance for your manufacturing or distribution business, complete our
Online Company
Profile or
download a faxable version and return
to our offices at (239) 274-7994.
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SOME PURCHASE ORDER BASICS
At Sacramento Factors,
we are experts in assisting small business entrepreneurs with purchase
order finance. When seeking purchase order finance, here are some
basic things to remember.
• Purchase order finance is
generally available only to manufacturers and distributors for the
delivery of goods. Purchase orders for services are generally not
acceptable for purchase order finance.
• Purchase order finance will
require both a creditworthy customer (issuer) as well as an acceptable
factory for the manufacturing process. The manufacturer must have
a history of being able to complete orders of size and specification as
demanded by the purchase order.
• In most cases, a factor will be
required to "take out" the purchase order finance company once the goods
are delivered to the customer and invoiced. Due to that fact, most
purchase order transactions are arranged through a factor. |
