Purchase Order Factoring Service

What is Purchase Order Financing?

 Purchase Order (PO) Financing, or Factoring, 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 on 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 Factoring

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.

Purchase Order Financing enables a company to:

  • Process large orders and expand production without worrying about depleting cash reserves
  • Obtain financing for presold goods and inventory to promote business growth and opportunity
  • Maintain their reputation as a business worth working with
  • Enable continued growth

Capstone’s Purchase Order Financing program is used to finance the purchase or manufacture of specific goods that have been presold by our clients to their creditworthy customers.

Typically, this structure is combined with one of our Factoring programs to finance the entire trade transaction or trade cycle.* With this combination of funding up front to cover supplies from the purchase order and reliable cash flow from factoring, businesses can assure they never are lacking in needed funds to complete an order or to continue taking on additional orders.

PO Financing can benefit a variety of business owners.

Purchase Order Financing can be of help to any Subcontractor including but not limited to:

  • Electricians
  • Painters
  • Architects
  • Landscaping
  • HVAC Contractors
  • Plumbing Contractors
  • Steel Fabrication
  • Carpenters
  • Concrete Contractors
  • Roofing Contractors
  • Staffing Companies
  • Environmental Companies

Typical clients (selling finished goods) include:

  • Suppliers
  • Manufacturers
  • General Contractors

Discover new ways to
fund your business

Purchase Order Financing may cover a large portion, sometimes up to 100%, of the supplies needed to carry out a job. Without this crucial piece, your potential to take on high profile jobs could be lost. If you turn down customers, your company’s reputation can be tarnished in the long run. Other future clients may think twice about calling you for a bid if they’ve heard you were not able to follow through on previous orders. Purchase Order Financing can help you to continue to grow your business seamlessly, without any hindrance from lack of cash on hand to cover supplies.

Capstone buys the client’s products from offshore and US manufacturers. We then import goods to the United States or to a third country. Next Capstone receives, stores and delivers merchandise to the clients’ wholesale buyers and creates working capital for our clients.

Purchase Order Financing can revolutionize growing businesses by:

  • Increasing working capital needed to support and enhance sales
  • Increasing product availability
  • Creating flexible credit terms for customers
  • Enabling businesses to accept larger orders and make more frequent bids
  • Allowing businesses to grow and better compete within its industry

* Trade cycle – the duration of time that a company receives an order from a customer, orders goods from their supplier, delivers goods, and receives payment from the customer.

Case Studies

Consider the following scenarios to gain a better understanding of what Purchase Order financing can do for your business today:

  • You are a highly seasonal business such as a landscaper or painter, and at the peak of your season, you obtain a much higher volume of orders than expected. PO financing will allow you to take on those orders and successfully meet your clients’ needs, without having to turn work down unnecessarily.
  • You run a newer remodeling business and have an existing line of credit from a traditional bank, which you have been using to cover for gaps in cash flow when supplies are needed for larger orders. However, because word of mouth has reached a large commercial client, they want to do business with you on a project bigger than you have done before. Your line of credit cannot be increased because you don’t yet have the history to show that it is justified financially. Purchase Order financing will look at your new client’s credit, not your own, and based on the purchase order amount will help finance the supplies you need, so you don’t have to forego that opportunity.

For more information on Capstone, please email us at [email protected] or call us at 212-755-3636 to speak with a representative today. We know that every business is different, and there is no standard solution that applies to everyone. That is why we offer you a customized set of recommended solutions for your individual business need. You can trust that our highly trained, professional representatives will work closely with you to determine the best solution to start accelerating your cash flow and fueling your growth today.

* Trade cycle – the duration of time that a company receives an order from a customer, orders goods from their supplier, delivers goods and receives payment from the customer.

For more information on Capstone, please email us at [email protected] or call us at 212-755-3636 to speak with a representative today.

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