What is Purchase Order Funding?

It is providing a business with cash to fill its purchase order and thus enable it to deliver the goods and / or services to its customer.

How does it Work?

Upon receiving a purchase order from your customer and submitting a cost breakdown to your funder, the funder will advance cash to your vendors and / or to your company to cover the cost of material and labor necessary to provide the goods and / or services.  The advance could cover other costs such as shipment, customs, etc., but it generally does not cover overhead or profit and it does not exceed a certain percentage of the purchase order.

Upon delivery of the goods and / or services to your customer, the purchase order then can be turned into an invoice. The P.O. funder is paid back his advance and fee, usually by your factor, from the proceeds generated by the invoice.

Benefits of Purchase Order Funding

P.O. funding allows you to fulfill the purchase orders of your customers when you do not have the sufficient funds to do that. It is a fast way of obtaining cash to fulfill your orders and expand your business without losing any equity.

Do You Qualify For P.O. Funding?

If you have a purchase order from a creditworthy customer and you have performance track record of delivering such product and / or service, then you generally qualify for P.O.funding.

Purchase Order Financing is used to pay your suppliers, laborers, or other intermediaries for goods or services to generate additional sales. A company will need purchase order financing when:

• You need expertise to handle the financing
• You need additional working capital
• You need a quick response to an immediate sales need
• You don't want to incur additional credit risk, be it foreign or domestic
• You want your buyers and sellers to not know each other
• You want the opportunity to make additional profit

GFR understands all the above reasons and will work with you to fulfill your needs.

Purchase orders for all types of transactions that include:

1.       U.S. Supplier to U.S. Buyer

2.       U.S. Supplier to Foreign Buyer

3.       Foreign Supplier to U.S. Buyer

4.       Foreign Supplier to Foreign Buyer

Every purchase order transaction stands on its own. GFR will look at your business history, the credit worthiness of the buyer, the ability of your supplier to produce the goods, and if the transaction is profitable for all parties.

Business History
GFR will secure funding for those organizations with a track record of producing goods. Your company may be young or a start-up, but your company management must have a proven track record to produce the goods.

Buyers Purchase Order
Your buying firm must be reputable with a good credit line. The purchase order must be verifiable.

Suppliers
Your suppliers must know your product and be able to produce it in time and to meet your buyer's terms. The supplier must be a firm with a good business history and track record of producing goods.

Profitability
The transaction after all expenses must make a profit for all parties. Payment of the money lent to support the transaction can come from any number of sources such as factored receivables.



Purchase Order Financing is available only to qualified customers. P.O. Financing falls into two types:

• Finished Goods
• Non-Finished Goods

Finished Goods refers to transactions where the goods are never touched by you. Usually these goods go directly from your supplier to your buyer. You never take direct possession.

Non-Finished Goods are when you the seller take possession of the goods either in a raw state (such as cotton to make womens dresses) or a semi finished state (partially sewn dresses). In either case you must take possession of the product.

Finished Goods are easier to finance than Non-Finished Goods. We will need to assess your ability to complete the transaction in processing the goods for the final shipment to your buyer. GFR secures both Finished and Non-Finished purchase order financing.

In order to consider P.O. Financing for your firm we will need:

• Completed P.O. Application Form
• Your invoice to buyer
• Your supplier's invoice
• Your purchase order to your supplier
• Profit on transaction - gross margins >18% - see work sheet
• Business History
• P&L (most recent)
• Balance Sheet (most recent)
• Time frame to produce goods
• Credit information on your buyer
• Supplier Information
• Finished Goods or Non-Finished Goods.