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Purchase order finance

Purchase order finance is a type of short-term commercial finance for providing capital to pay seller’s upfront on the basis of verified purchase orders. It helps companies in accepting huge orders and adjusts the loan basis up or down quickly in terms to meet the needs. If due to any uncertain reason order volume shows some drops, there’s no long-term commitment so it can be stopped at any time. Purchase order finance generally goes in ease with invoice finance, as the financier is paid back by an invoice finance provider when commodities are received by the customer.

Who uses it:

Purchase order finance is designed for growing businesses that have the initiatives of fulfilling large orders. They generally have poor cash flow and little access to working capital. The types of businesses that usually qualify for purchase order finance includes:

  • Manufacturer
  • Distributor
  • Wholesaler / Reseller
  • Importer / Exporter

Whether a start-up or an established business, we are here to know your story and make our program work to meet your needs.

How purchase order finance works

  • 01
    You Receive a Purchase Order.
  • 02
    Your Supplier then Estimates your costs.
  • 03
    You Apply for Purchase Order Finance.
  • 04
    Your Supplier Gets Paid.
  • 05
    Your Supplier Delivers the Goods to Your Customer.
  • 06
    You Invoice Your Customer.
  • 07
    Your Customer Pays the Purchase Order Financing Company.
  • 08
    The Purchase Order Financing Company Forwards Your Money.

Advantages of Purchase order finance:

  • check_circle_outlineIt is easy to qualify
  • check_circle_outlineNo personal guarantee is needed
  • check_circle_outlineProven great for start-up's
  • check_circle_outlineFlexible funding is provided

What does it cost:

The cost of financing purchase orders can vary for each and every transaction. The monthly percentage of this finance is based on the lender’s underwriting factors, which includes: paying upfront for products, delivery as per the contract, waiting 60 – 90 days from delivery of consignment to get paid.

When Purchase Order Financing Is Right

Purchase order financing is considered to be the best when the business experiences seasonality, substantial growth, or consistent cash flow shortages. Purchase order financing helps small businesses to avail advantage of growth as well as seasonality by providing the necessary funds to meet the needs of the customers. It also helps in relieving and even solving cash flow problems. This is done by reducing the amount that business owners have to invest up front.

Purchase order finance can help you in various scenarios that include:

  • Seasonal sales spikes
  • Substantial growth
  • Consistently tight cash flow

Parties involved in purchase order finance

  • Borrower: The one who is seeking for financing.
  • Financing company: The Company which provides finance. The Purchase order finance company first evaluates the purchase order and on its basis provides funding to the supplier.
  • Supplier: This is the one responsible for the supply of goods to the borrower who resells or distributes. The supplier receives payment for the consignment directly from the company who provided the finance.
  • Customer: This is the ultimate recipient of the consignment or order. When purchase order financing is utilized, customer is supposed to remit their payments directly to the provider of purchase order finance.

Want more information about purchase order? or looking for most suitable finance solution for you? Talk to our finance experts now.

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Features of Connect2India finance

Why finance with Connect2India

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Easy processing

Complete online application process makes it easier for us to process forms faster and provide same day loan approvals.

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Fast disbursals

With online loan processing, business loan is disbursed within 3-5 business days of loan approval.

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Collateral free loans

No need to put your valuable assets in risk, we have unsecured loan that do not require any collateral.

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Fair interest rates

Our advanced algorithms determines the best rates for the type of loan you business require.

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No hidden costs

There will be no hidden costs or any other charges involved. Only processing fee of 2% is charged

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Flexible repayments

Loan repayment structure can be customized depending upon how your business is growing.