When it comes to Canadian exports most people think of maple syrup, pine lumber, and fruits. However, Canada’s largest exports include crude petroleum, automobiles, and aircraft or spacecraft parts. The proximity and favorable trade agreements make it very attractive for US based businesses to trade freely with Canada. Similar laws and culture also make trade finance options including purchase order financing Canadian imports easily obtainable.Canada US Trade is StrongThe US makes up for about 75% of Canada’s global trade. More products are imported and exported between Canada and US than any other Canadian trade partner. The United States-Mexico-Canada Agreement (USMCA) plays a large part in the development of such a strong trade relationship.According to the Office Of the United States Trade Representative, Executive Office of the President, the USMCA agreement is responsible for a few main functions including:
- Giving American employees a more fair advantage on imports and how currency trade is managed.
- Supporting farms, ranchers and other agricultural businesses with more modern practices and trade strategy in North America.
- Protections for intellectual property
- Enforcement of commitment disputes to protect US businesses
Accessing purchase order financing for Canadian exportsAnother benefit of such strong a strong trade relationship is the ease of accessing trade financing options such as purchase order financing Canadian trade transactions. There are many factoring and supply chain finance companies that are willing to assist with cross border trades between Canada and the United States. More favorable terms will be available for purchase order financing Canadian exports than countries where there might be a more significant language and culture barrier, or major differences in the legal system.When a US or Canadian company secures a large purchase order from a buyer domestically or cross border, more lenders are willing to support them. Purchase Order Financing or Factoring are great options to support the production of goods and the sale of those goods to credit worthy buyers.Having the cash required for trading will always be the most important resource in running a successful trading company. Sellers aren’t in the business of financing their customers. Purchase order financing Canadian exports allows a buyer to pay up front for goods they want to acquire.How purchase order financing Canadian exports worksBelow we will outline how purchase order financing works with Canadian exporters or importers.
- Company receives a purchase order from a credit worthy customer
- Company presents purchase order and production/sourcing plan along with purchase order to a purchase order financing company
- Company is onboarded with the purchase order financing company
- Purchase order financing company pays for goods directly to the supplier
- Supplier ships product direct to customer or into companies’ warehouse for distribution
- Customer pays purchase order financing company directly
- Company receives the proceeds and profit from purchase order financing company
Purchase Order Financing Canadian Goods is EasyAs you can see from above, purchase order financing is very straight forward. The process fits in line with current operations and is minimally invasive. When you receive a large purchase order, don’t hesitate to engage a lender that can help you. Purchase order financing for Canadian exports is a great way to grow your import business.How much does purchase order financing Canadian exports cost?The cost of purchase order financing depends on three things:
- Size of the order
- Credit worthiness of your customer
- How long the financing is outstanding
These three variables will determine your cost for po financing Canadian goods. Typically, the rate for this type of financing will range from 1-2.5% per 30 day period.Will purchase order financing work for my business?Purchase order financing fits a wide range of companies. The transactional nature of the process allows it to fit into many different structures. As long as you meet the below criteria you can qualify to start purchase order financing Canadian exports today.
- Qualified purchase order from credit worthy customer
- No major outstanding liens or judgements that would prevent a lender from becoming secured in the transaction
- A reputable source of product on the front end that can deliver in the right quantity and quality, and on time according to the terms of the purchase order
Get Started with purchase order financing Canadian orders todayThe process to get started is easy. Follow these steps below to get started:
- reach out to a company like Star Funding, Inc. who will provide you with an application.
- Once completed you will receive a term sheet that lays out pricing and general structure
- Sign the term sheet and lender will prepare the financing agreements
- Sign the agreements and submit the transaction for review