What is Purchase Order Financing?
The Creditworthiness of Your Customers
- Credit approvals – Your invoice factor company will look at the credit profile of your customer to determine if they are approved for advances against the resulting AR. A non-recourse factor will also include credit insurance from a company like Allianz.
- Factoring advances – Financing a purchase order is usually more expensive than AR factoring. If your factoring company can advance against the AR and pay out the po funding company, you will save money.
- Professional collections – Factors know how to handle customer disputes and other issues in a professional manner.
Your Company’s Overall Financial Health
The Amount of the Purchase Order
The Type of Product or Service Being Ordered
WIP(PO) Funding vs Finished Goods (PO) Funding
WIP (Work In Progress) is where the process to build or produce inventory involves purchase multiple components and assembly. Finished Goods Funding only requires the purchase of a single ready for resale product. Most lenders will only consider financing finished products. Work In Progress can carry too much performance risk for a lender to get comfortable with.