Purchase Order Financing

A Complete Supply Chain Finance Solution

Over 18 Years in Business

Recent Transactions

invoice factoring for a invoice factoring for security alarm and camera installer

$500,000

Security Alarm Installer

invoice factoring for a invoice factoring for industrial pipe coating repair company

$350,000

Coatings for Pipeline

Purchase Order Financing

P.O. Financing involves a specialized lender that provides transactional financing to a vendor/business (the Applicant) to help process an order requested by a credible account debtor (Customer being sold to).

Purchase Orders in process
What are the typical parameters considered in PO Financing? Many things will be considered during the review process and it all comes down to risk, type of product/services rendered, number of days it will take to get it delivered, transaction history between vendor and the account debtor, and one of the most important of all “Gross Margin”.

What makes 1st Commercial Credit one of the best purchase order finance companies in the market?

We offer a broad selection of purchase order funding programs for your manufacturing and distribution business. Including domestic or international trade financing needs. Purchase Order Finance is available for U.S. based companies with a proven track record in their industry.

Our areas of expertise include all of the supply chain finance segments including invoice factoring and extended terms to Buyers.

1st Commercial Credit provides funding for 3 types of purchase order request. Please note that the client must already be factoring receivables in order to apply for our purchase order finance program.

1. Finished Goods PO Finance – Finished and packaged product is the most common inquired type of p.o. finance needed by our clients. USA based importers that need to pay overseas suppliers, logistics and duty fees are funded very easily.

Light Assembly Finance – This type of financing is higher risk due to the inventory arriving at the client’s place of business and having to assembly or manufacture some items to get it to a finished product. The client must have a good track record and consistent delivery performance in the past with the items to be financed. Financing can include cost of labor and import duty fees.

Production Finance – 1st Commercial Credit provides production financing only with existing clients that are already factoring. Must have 2 years in business, historical sales of items to be submitted for funding, strong financially stable suppliers, profitable client in good standing. current on rent with landlord, taxes and 941 obligations. Financing includes raw materials, logistics cost, import fees and labor.

Custom structures are made for each client because not every purchase order finance request is the same. Alternative funding such as short term transactional funding options are available if the client cannot meet our standard purchase order financing criteria.

Is a purchase order a legal document?

Why Choose Us for Purchase Order Funding?

Custom P.O. Financing Structures 18+ years in business

  • P.O. Financing Rates at 1.5% to 5%
  • We Provide Factoring and PO Finance
  • Offer Early Payment to Suppliers
  • Finished Goods Finance Accepted
  • Light Assembly Accepted
  • Production Finance Accepted

What is the Purchase Order Financing Criteria

Please review the preliminary criteria

  • Must already be factoring receivables with credit approved customers, no credit insurance is required so long as the factoring company has credit approved the account debtor that has issued the P.O.
  • Must be in business for at least one year with tax returns.
  • Must have experience and previous transactions with client and factoring company must have notice of assignment in place before considering funding.
  • Must have at least an initial $100,000 transaction minimum.
  • Recurring weekly Revenues
  • Must have a viable purchase order from a credit worthy customer, expiration date must be withing delivery reach.
  • Must retain a minimum of 25% profit.
  • Must be a USA company.
  • Preparing the application for purchase order financing
Shipyard with inventory waiting for payment from purchase order finance company
A recipe for disaster in PO finance! A vendor that’s new in business selling a new item in the market with no sales history, dealing with suppliers that want cash before shipping to an account debtor that’s ordering for the first time wanting a return guarantee if it doesn’t sell. The reality is these deals never get approved.

What is considered in a Purchase Order Finance Transaction?

  • Industrial and Manufacturing
  • Wholesale distributors/ importers and exporters
  • Government Contracts
  • Service Contracts
  • Retail and Apparel
  • Direct shipment/Drop ship orders
  • Project funding for the following costs:
  • Deposits
  • Raw Materials
  • Components and Sub-Assemblies
  • Project-specific Labor
  • Finished Goods
  • Overhead
  • Direct Manufacturing
  • Shipping
  • Letters of Credit
  • Letters of Guarantee

What Should a Purchase Order Always Mention About the Transaction?

A small business does not need an expensive legal department to understand how a purchase order works. The biggest misconception about a purchase order is that it is a legally binding document. This is true, but only under certain conditions. In order for the purchase order to be legally binding, both parties must agree to it and the vendor must satisfy all of the conditions of the purchase order. That means that a vendor cannot collect on a purchase order until it has done its part to satisfy the order.

The wording on a purchase order is critical to its success. Most companies get purchase order forms that outline all of the blanket conditions of the transaction. A blanket condition is something that applies to every order. Examples of blanket conditions include the payment options, return policies and shipping policies. The information that is specific to that order is also important when being printed on a purchase order.

Payment Terms

This section will outline the payment terms of the transaction as the buyer understands them. If the seller has a different view of the payment terms, then that should be discussed before the purchase order is made final.

Delivery Date

There are two specific elements of the delivery date that should be included on every purchase order. The first element is the date itself. In most cases, the delivery date is negotiated between the seller and buyer in advance of creating the purchase order. The other element that should be included is an indication as to whether or not that delivery date is firm. If a product is critical to the success of a project, then the customer may need the delivery date to be firm. If the product is not critical, then a flexible delivery date can make the relationship between the buyer and seller much smoother.

Product Or Service Details

The product or service details need to be extremely comprehensive. These are some of the more important conditions that the vendor will be held to when it comes time to pay on the purchase order. The buyer needs to outline the exact terms of the service or specifications of the product on the purchase order for it to be effective. A general or vague product or service description could wind up causing confusion and delay payment.

All Pricing

A purchase order should include the unit price, the number of units, the total price, a subtotal, any shipping and handling charges, any taxes or other fees and then a final purchase order price. The complete purchase order pricing goes right along with the product or service details as one of the more important parts of the purchase order. Be sure to include all elements of the pricing on the purchase order so that there can be no confusion between the buyer and the seller.

Contact Information

It is always interesting to see how many companies forget to put complete contact information on a purchase order. If this information is not complete, then the vendor may not know who to contact if there is an issue.

Comprehensive Shipping Information

If a buyer does not want his product shipped to the wrong location, then be better check his shipping details on the purchase order before issuing the order. A vendor will ship to whatever location is on the purchase order. If the customer has special shipping instructions and does not include them on the purchase order, then the buyer will have created an issue that the vendor will not be responsible for.

Is a Purchase Order a Binding Contract?

Why Choose Us for Purchase Order Funding?

Custom P.O. Financing Structures 18+ years in business

  • P.O. Financing Rates at 1.5% to 5%
  • We Provide Factoring and PO Finance
  • Offer Early Payment to Suppliers
  • Finished Goods Finance Accepted
  • Light Assembly Accepted
  • Production Finance Accepted