Funding the purchase order of finished goods is the most common form of Purchase Order Finance. Generally speaking, this transactional form of finance follows a set of procedures, which when followed, should lead to a Win/Win situation for the client, the financier and the end customer. Below is how a typical Purchase Order Funding Finished Goods transaction works:
1. The client obtains a confirmed purchase order for finished goods from a credit approved customer.
2. The client places a purchase order for finished goods with his manufacturer/supplier (foreign or domestic).
3. Just before the goods are ready to be shipped, STAR will send in an independent 3rd party inspection company to make sure the products are what was ordered in the right quantities, quality and in the right time frame.
4. Assuming the manufactured products to be financed and necessary documents are in order, STAR will pay for the documents. If required, STAR will pay for duty and freight as well.
5. The products may be drop-shipped to the customer or shipped to a warehouse where they are unpacked and staged for shipment to the customer.
6. When the merchandise is shipped to the customers, the receivable is assigned to STAR. Sometimes there is a senior lender or factor involved. In those cases, the senior lender or factor will make advances against the receivables direct to STAR sufficient to repay its advances and fees.
When choosing a Purchase Order Funding Finished Goods company it’s important to find a partner who is familiar and experienced in manufacturing, logistics, finance, and trade. STAR Funding offers a mix of talents in all of the above allowing us to provide the best Purchase Order Funding Finished Goods programs for even the largest and most complex transactions. Contact STAR Funding today to learn more from a STAR Funding representative.