Purchase Order Finance summary:

• Availability of funds. You get the funds necessary to execute the order and thereby honor your commitment. Your cash flow improves dramatically.

• Various facilities. Many finance companies provide a receivables funding facility, which is linked to the purchase order finance facility. Funds are usually provided by making direct payments to your supplier, or by issuing a letter of credit, or by providing a supplier guarantee.

• Direct payments to suppliers. Your suppliers are paid directly by the finance company. Typically up to 80% of the confirmed purchase cost can be paid. The remaining 20% minus the fees of the finance company are paid when your customer pays your invoice.

• Issuing a Letter of Credit. Based on the provisions and governed by the rules of the International Chamber of Commerce, finance companies or Banks back the commitment of payment to the supplier by issuing a Letter of Credit.

• Supplier Guarantee. Leading financial companies provide a commitment of payment to suppliers. This supplier guarantee is grounded in the availability of funds generated from the accounts receivables facility.

Single or Multiple transactions can be made – Once you deliver the goods, which are accepted by your customer, and proof thereof has been obtained, then typically up to 85% of the amount of the invoice can be advanced to you immediately. This funding can facilitate the execution of other transactions. Thus multiple transactions can be made with confidence.

Local reach. The buyer or the supplier may be located anywhere in the United States of America. For local purchase order finance, some finance companies give up to 80% of the amount of the PO order. Leading finance companies have a global reach and they can also fund overseas purchase orders. For overseas PO financing, usually a Letter of Credit is opened. The PO finance is generally obtained from the funds that are generated from the financing of the accounts receivables.