How Purchase Order Financing Improves Cash Flow

Purchase Order Financing to Improve Cash Flow

Purchase order financing, or PO financing, can help small businesses and startup companies who may be having a difficult time filling large orders. Companies use purchase orders to record orders from their customers. These purchase orders, create a contract between a company and their customer. It means that the customer promises to pay after the products are delivered. Because this arrangement creates a contract, it makes the purchase order valuable to companies known as factors. A factor can fund a purchase order from a company and provide them with the cash they need to produce and fulfill their order.

Purchase Order Financing to Fuel Sales Growth

Purchase order financing is an often overlooked way to get the cash you need to grow your business. A purchase order signifies a promise to pay and can be used to obtain the cash you need to fulfill your orders. By financing your purchase orders with a PO financing company, you will have the cash to fill new orders. PO financing for sales growth can be a great option for many growing businesses.

How PO Financing Works

  1. Customer Orders: Your receive purchase orders from your customers.
  2. Cost Estimate: You provide the cost breakdown of the purchase order to Universal Funding including materials and/or labor.
  3. Funding: You and or your supplier is paid by Universal Funding. This may be for supplies, materials, and/or labor.
  4. Order Fulfilled: You and/or your supplier fulfills the order and your customer accepts the goods.
  5. Invoicing: You invoice your customer for the fulfilled order. You then submit your invoices to Universal Funding for factoring.
  6. Invoice Factored: The proceeds of factoring pays off the purchase order funding and the remaining advance goes to you.
  7. Customer Pays: Your customer pays their invoice directly to Universal Funding.
  8. Final Close-out: Universal Funding deducts the advance and the fees, then pays you the remaining balance.

Give us a call today at 800.405.6035 or complete a rate form and a factoring specialist will get in touch with you right away.