You may be able to get funding with purchase orders.
Sometimes, companies receive more orders than they can fulfill with the capital they have. That means they will require a lending company’s help if they still want to fulfill those orders. Rather than opting for a traditional small business loan, however, they may secure purchase order financing instead.
Purchase orders, or POs, refer to legally binding documents issued by buyers to sellers. These documents detail requested services or products at a mutually agreed upon price. It is essentially a contract between the two parties saying the buyer will commit to paying the agreed upon price after their order is fulfilled, acting as insurance for the seller. Purchase orders can then be used by the seller to obtain funding from a lending company. Here is a brief overview of how purchase order loans work:
- You receive a purchase order and reach out to your supplier to find out how much it will cost to fulfill it.
- You apply for purchase order financing.
- If the financing company approves your request, they pay your supplier and your supplier provides what you need.
- You deliver the goods or services to your customer.
- Your customer pays the financing company.
- The financing company subtracts their fees from the amount and pays the remaining amount to your business.
Securing funding through purchase orders can be a great way to fulfill a large number of orders or massive orders that your company does not have the cash to complete on its own, potentially increasing sales and cash flow.
Turn to us at TB Capital Partners if you would like to apply for funding using purchase orders as collateral. We are based in Covington, Louisiana and serve businesses throughout the country. Contact us today.
At TB Capital Partners, we offer loans for purchase orders to customers in Covington, New Orleans, and Baton Rouge, Louisiana.