Purchase Order Financing
Purchase order (PO) financing is a lending option that assists businesses that need quick cash to fulfill customer purchases and to cover various expenses, such as shipping costs. With PO financing, a company can fulfill an expensive order that their client has placed that they may not have been able to fulfill otherwise due to lack of capital.
New businesses or small businesses are the biggest beneficiaries of purchase order financing, as they may not qualify for a traditional bank loan. The PO financing process is as follows:
- The client receives an order that they cannot fulfill without purchase order financing
- Once approved for PO financing, the lender pays the supplier directly to help the client fulfill the order
- Once the customer receives the completed order, the client sends them an invoice
- The customer pays the invoice, sending payment directly to the lender
- The lender releases the payment to the client, except for a fee for their services