5 Things Purchase Order Financing Companies Consider

Interested in purchase order financing? If you’re looking for more information about PO financing for your business then you’re in the right place! In this post we’ll review 5 things purchase order financing companies consider when determining eligibility.

Let’s start with the basics.

Purchase order financing is a type of short-term funding that can help businesses with limited working capital to fulfill large orders. The purchase order financing company essentially pays your supplier upfront, so you can get the products you need to fill your customer’s order. Once you receive payment from your customer, you then repay the loan plus fees to the lender.

It’s important that your customers have a good credit history in order for you to be approved for PO financing. Purchase order finance companies will want to be sure that they will get paid back by your customers when they invoice them. Usually, companies will only approve PO financing if your customers have a credit profile that supports the order.

Purchase order financing companies look for companies that are able to demonstrate overall good financial health. While this typically doesn’t mean that your business must have great credit, it does typically mean that your business must have a healthy cash flow and low levels of debt.

Of course, the amount of the purchase order itself will be a factor that purchase order financing companies consider. The larger the purchase order, the more risk involved for the financing company. As such, you may only be able to finance a portion of a large purchase order.

The type of product or service being ordered can also be a factor that purchase order financing companies consider. Some products and services are considered to be higher risk than others. For example, PO financing companies may be hesitant to finance the purchase of commodities due to the volatile nature of commodity prices and more likely to finance the purchase of products with a long shelf life.

Finally, the reputation of your supplier can also be a factor that purchase order financing companies consider. Companies will want to be sure that your supplier is reputable and has a good track record of delivering on their orders. They’ll also want to be sure that your supplier is financially stable and able to continue supplying you with the products or services you need.

If you’re interested in learning more about purchase order financing, be sure to check out our website or give us a call today! We would be happy to answer any questions you have.