Purchase Order Financing Alongside Factoring
Do you have a client in need of a line of credit to support their purchase orders? In the event their cash on hand is not adequate to purchase the product they need, a PO line can provide that cash. In this instance, the purchase
order financing source will provide the cash to buy the goods up front. Later, after the goods have been delivered and accepted, the invoice is presented for payment, and a factoring solution, such as A/R Funding, enters the picture. A/R Funding will finance the invoice with an advance of 80% (or more), and the funds are used to pay off the initial PO line of credit.
In many cases, a PO line of credit is used in tandem with receivable financing. The much higher risk associated with a PO financing understandably increases the cost to the business. However, factoring costs are markedly lower than PO costs. So, when these two financing sources share the transaction, it reduces the expense to the borrowing business, creating a win-win solution for all.
A/R Funding has years of experience working alongside PO lenders. If your client requires this type of financing, please contact us.