If your business is looking to expand its operations into new international markets, purchase order financing can be a great way to help get your products and services to new customers.
In this guide, we will provide an overview of purchase order financing for international businesses and trade. We’ll discuss the different types of sales that qualify for purchase order financing, as well as the benefits that this type of financing can offer. Finally, we’ll provide a step-by-step guide on how to obtain international purchase order financing for your business.
International Purchase Order Financing: The Basics
International purchase order financing is a type of financing that is specifically designed to help businesses with the purchase and shipment of goods for international sales. This type of financing can be used for a variety of different types of sales, including:
- Export sales
- Import sales
- Cross-Border Trade
What Business Qualify For International Purchase Order Financing?
In order to qualify for international purchase order financing, your business must be able to demonstrate that it has a purchase order from a qualified buyer. The purchase order must be for goods or services that are to be shipped to an international destination. In addition, the purchase order must be from a credit worthy end buyer.
What Are The Benefits Of International Purchase Order Financing?
There are a number of benefits that your business can enjoy by using purchase order financing for international sales. Some of the most notable benefits include:
Improved Cash Flow
By leveraging international purchase order financing, businesses can free up working capital that would otherwise be tied up in the purchase and shipment of goods. This can provide a much-needed boost to your business’s cash flow, which can be used to finance other areas of your business.
Expanded Market Access
Another benefit of international purchase order financing is that it can help businesses expand their market access. By financing the purchase and shipment of goods, businesses can enter into new markets that they may not have otherwise had access to.
International purchase order financing can help to reduce the risk associated with international sales. Most purchase order finance companies will require the resulting invoices to be insured by a trade credit insurance agency. This credit insurance can help to mitigate some of the risks associated with international trade.
How To Obtain International Purchase Order Financing
If your business is interested in obtaining purchase order financing for an international sale, there are a few steps that you will need to follow. Here is a step-by-step guide on how to obtain purchase order financing for your business:
Step One: Find A Lender
The first step is to find a lender that offers purchase order financing. There are a number of different lenders that offer this type of financing, so it is important to shop around and compare rates and terms. Purchase order funding is also different than accounts receivable factoring, so make sure you are speaking with the right lender.
Step Two: Submit Your Application
Once you have found a lender that you are comfortable with, the next step is to submit your application. You will need to provide information about your business, as well as the purchase order that you are looking to finance.
Step Three: Review and Approval
After your application has been submitted, the lender will review it and make a decision on whether or not to approve your loan. If your loan is approved, you will be given a purchase order financing agreement that outlines the terms and conditions of your loan.
Step Four: Funding
Once your purchase order financing agreement has been signed, the lender will provide you with the funding that you need to finance your purchase order. This funding will be used to pay for the purchase and shipment of your goods.
Step Five: Repayment
Once your goods have been shipped, you will need to repay the purchase order financing loan. The repayment terms will be outlined in your purchase order financing agreement. Typically, lenders will require that the loan be repaid through a factoring agreement or upon payment by customer.
As you can see, purchase order financing can be a helpful tool for businesses that are looking to finance the purchase and shipment of goods to an international destination. If your business is interested in obtaining purchase order financing, follow the steps outlined in this guide to get started.