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Purchase Order Financing

Is your small manufacturing or distribution business receiving orders from large retailers you are having difficulty filling or manufacturing because of their size?  If so, purchase order finance may be a ready working capital solution for you.

How Purchase Order Finance Works

Purchase order finance is used to finance the manufacture or purchase of goods where a firm, non-cancellable order exists from a large, creditworthy buyer.  It is very often associated with offshore manufacturing of garments where a factory (contract manufacturer) requires the posting of a letter of credit to make goods destined for a large retailer.  It is, however, just as commonly used for solely domestic transactions as well.

For your business to qualify, our purchase order finance underwriters will look at…

  • Order Size:  The size of the purchase order should be for $50,000 or more in goods (wholesale)
  • Factory:  Wherever located, the factory must be a “legal” factory with a history of successfully producing the product.
  • Firm Order:  The purchase order must be a firm order without conditions which could negate the transaction once the goods are delivered.
  • Customer:  The retail customer must be creditworthy.
  • Take Out:  There must be a provision in place to “take out” the purchase order finance company once the goods have been delivered. (This is usually accomplished through factoring of the invoice once the goods have been shipped and received.)

Goods Only.  Not Available for Service Contractors in Need of Mobilization Funds

Purchase order finance is customarily only available for financing the manufacture or delivery of goods.  It is not available for nor can it be used as a source of “mobilization” money to perform a service contract.  It additionally cannot be used to finance inventory.  There must be a firm order for the goods where payment will be received in 90 days or less once the goods are delivered.

Find Out More

One of the best ways to further explore purchase order finance and to see if its right for you and your business is to give us a call and speak with a Business Development Officer. Our knowledgeable Business Development Officers will answer your questions. We’ll even schedule a call with an underwriter. Purchase Order Financing from Blue Ridge Factors could be the answer to your fulfillment needs. To apply click here. Or download the application here.

Purchase Order Finance