Universal Funding, a leading factoring receivables company, recently announced that they are now offering purchase order financing as an additional option for companies seeking commercial capital options.
Purchase order financing is a short term financing method used to cover the cost of manufacturing or purchasing goods that have been presold through a purchase order. There are two types of purchase order financing; funding for finished goods and funding for non-finished goods.
Funding Finished Goods
This type of PO financing refers to the sale of products that are never touched by a wholesaling company. An example of this would be a wholesaler who receives a large order from a department store. After receiving the purchase order, the wholesaler places the order with the manufacturer. Once filled, the order is shipped directly from the manufacturer to the department store, never touching the wholesaler.
Funding Non-Finished Goods
This type of PO financing refers to sale of a product where a company takes possession of the components and transforms them into the final product. This could apply to a manufacturing plant, which transforms raw materials into a product. It would also apply to a business that purchases containers of office supply furniture from China, assembles the pieces here in the States before selling them to another company. Typically this version of funding through PO financing is harder and more costly than funding finished goods, as there are inherently more risks that go into the equation.
Universal Funding is offering funding for both finished goods and non-finished goods. “We have been tracking a rise in requests to facilitate purchase order funding from current clients and potential clients. We want to meet the capital needs for these businesses,” conveys Universal Funding’s CEO, Henry Wozow.
“Businesses will see an especially large cash infusion when they couple our purchase order financing and invoice factoring services together.”