THE BASICS OF PURCHASE ORDER FINANCE
WHAT ARE THE BASICS OF PURCHASE ORDER FINANCE?
The Basics of Purchase Order Finance is a financing given to businesses with the purpose of allowing them to have enough cash to pay for their orders. First of all, this allow companies to accept huge amount of orders and it also help the receiver to reduce their loans amounts. As such, they will have to ability to secure enough cash to fund the orders while waiting for the payments of their customers.
The lender will then directly pay the supplier by cash or sending them a letter of credit. This is the reason why this type of financing is more appropriate for businesses which intend to place big amount of orders. It is available to both small and big reseller companies which might have lack of cash flow to pay the suppliers or manufacturers. In addition, the cost of PO Finance depends on different transaction factors, which are generally short-term, lasting between 30-90 days.
The above text is taken from the IMMFinancial website regarding purchase order finance basics. As small businesses often require financial assistance in tricky cash-flow situations we wanted to share this great resource. There are a number of great financial services on the site including Invoice factoring.