Purchase Order Funding!

Purchase Order Funding (PO Funding) is not a factoring transactions. Some business owners have a misunderstanding thinking that they can receive an advance on their PO's and use the funds as they please.

Purchase order financing is short term funding used by a borrower to finance the fulfillment of a sales contract (order) with a credit worthy end customer. The terms of the purchase order financing agreement are very specific, requiring the borrower to use loan funds for the purchase of certain materials and/or services needed to deliver goods to the end-customer. The PO funder handles the flow of these funds. Once the order is fulfilled it is then turned into an invoice which is then factored.

Remember this simple rule. Factoring is for business to business products or services, the product must be delivered or the service rendered, no pre-bills. The invoice must be to a credit worthy company. You will find many factoring blogs in the archives to your right on this topic

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