Purchase Order Financing

“PO” financing is a non-credit sensitive form of financing that is normally used in the manufacturing sector when a business has insufficient cash on hand to fill their customer orders. A PO finance company provides the manufacturer with a cash advance based on a percentage of the value of the goods ordered by their customer. The business then uses the cash to cover expenses related to fulfilling that order. The PO finance company is normally repaid when the business’ customer pays for the products they ordered. The finance company subtracts the amount borrowed plus their fees and interest, then passes the remainder on to the borrower. PO financing provides a business with working capital to pay suppliers and enables them to execute orders for customers where they might otherwise have to decline the order. BFC’s make either a percentage of the lenders fee or earn points on the amount of the transaction.

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