Companies often fulfill orders with the use of purchase order financing. A purchase order represents a customer’s obligation to make good on an order they’ve made. This means that they represent a value to both the company that owns the purchase order, but also to factoring companies. A factoring company can offer a business the ability to secure the cash they need to purchase the materials they need make good on a purchase order by selling the purchase order to the factor. This process is known as purchase order factoring. In this scenario, rather than purchasing an invoice, which is a demand for payment after the delivery of a product, the factor finances the purchase order. The purchase order represents a promise by the customer to make payment after the delivery of the product. The factor will determine the value of the purchase order based on the creditworthiness of the customer and the size of the order.
The best factoring companies will not only factor sales invoices, but provide purchase order financing as well as one of their available financing programs. Universal provides PO financing in conjunction with invoice factoring to their customers in the manufacturing industry. By doing both methods of financing businesses get a big source of cash flow at a lower cost than if they just did traditional po financing without invoice factoring. If you are in need of quality PO financing, give Universal Funding a call at (800)405-6035 or submit a rate form today.