Most Popular Industries We Fund
Purchase Order Financing
During periods of growth, your company might stop accepting fresh orders for want of adequate cash flow. To obviate this situation, we, at 1st Commercial Credit, have developed a unique purchase order financing solution for UK based companies with a proven track record in their industry. We have extensive experience in selecting and offering the most suitable purchase order financing program to meet your domestic or international trade financing needs.
Our areas of expertise include production finance for work in process and Letters of Credit for trade finance, including import and export transactions as well as domestic trade purchases. We can work in conjunction with factoring or accounts receivable financing sources to provide a complete business solution to turn purchase orders into receivables.
Purchase order is a document issued by your buyers clearly indicating quantities, types and agreed prices for products you would provide them. Thus purchase order acts as a legal offer from your buyers to buy your products and once accepted by you, it becomes a legal contract.
Purchase order financing is a variant of traditional factoring. It is an effective short-term financing tool when you are short of cash to pay for goods or materials needed to fulfill customer’s order. It is quite common for your suppliers to demand payments on cash-on-delivery terms while your customers (end buyers) seek at least 30 to 60 days time to pay their invoices. This would put your company in a tight working capital situation for a short period or might even force your company to downsize business for want of funds.
We provide up to 80 percent of the invoice value against confirmed sales to customers. By using the purchase order as collateral, our purchase order financing can cover 100 percent of supplier expenses. We work collaboratively with you to arrive at the cost of finance in advance and incorporate this into your quotations so that your company can enjoy consistent growth without any cash flow constraints.
- Sales growth is outpacing available working capital or bank credit lines.
- Seasonal sales spikes or growth spurts put a sudden strain on cash flow.
- Working capital must be preserved for other mission critical operations such as R&D, manufacturing or capital equipment.
What is the Purchase Order Financing Criteria
- Must be in business for at least one year.
- Must have experience and previous transactions with client or other similar clients.
- Must have at least an initial $100,000 transaction minimum.
- Must have a viable purchase order from a credit worthy customer or a Letter of Credit that satisfies our criteria.
- Must retain a minimum of 25% profit.
- Must be a USA company.
What is considered in a Purchase Order Finance Transaction?
- Industrial and Manufacturing
- Wholesale distributors/ importers and exporters
- Government Contracts
- Service Contracts
- Retail and Apparel
- Direct shipment/Drop ship orders
- Project funding for the following costs:
- Raw Materials
- Components and Sub-Assemblies Project-specific Labor
- Finished Goods
- Direct Manufacturing
- Letters of Credit
- Letters of Guarantee