Sometimes there just is not enough money available to cover the cost of an order from a customer. The result is having to turn down the order and a loss of business and credibility with that customer. This loss is not only this order, but future business. Your company looks unreliable in the eyes of the customer.
Purchase Order Financing is quick, short term capital without incurring debt for the company and protecting the company cash for expenses. This can be used for single orders or multiple transactions. It allows a company to accept larger orders and deliver them without tying up their capital.
Purchase Order Financing is used when the funding source pays the supplier for the goods ordered to complete a customer order. The funding source will then collect the invoice payment from the end customer.
This can be for domestic transactions and providing Letters of Credit on International transactions. Purchase Order Financing is used in conjunction with Factoring/Invoice Financing