What is Purchase Order Financing?
Purchase Order (PO) Financing is a type of commercial financing that allows a business to receive funding for a pre-ordered project using the purchase order from the client as collateral. Many times, small or growing businesses will not have the funds on hand that they need in order to purchase all of the materials necessary for a big job, nor can they obtain credit from a traditional financial institution based on their credit alone. The difference between PO financing and traditional bank financing is that PO bases its credit decision off of the financial situation of your client, and a bank would be looking at your finances alone regardless of any purchase order promising future income.
Purchase Order Financing can remove barriers to growth that trying to obtain traditional financing might cause. It also has a generally higher turnaround time in processing than traditional commercial loans. Payment is made to your suppliers, we receive payment from your customer, and your profit is paid directly to you.