{"id":2729,"date":"2020-03-23T14:19:44","date_gmt":"2020-03-23T14:19:44","guid":{"rendered":"http:\/\/localhost\/2020\/swoopMW20\/?post_type=knowledge-hub&#038;p=2729"},"modified":"2024-08-22T18:35:07","modified_gmt":"2024-08-22T18:35:07","slug":"purchase-order-finance-po-finance","status":"publish","type":"knowledge-hub","link":"https:\/\/swoopfunding.com\/ca\/knowledge-hub\/purchase-order-finance-po-finance\/","title":{"rendered":"Purchase order (PO) finance"},"content":{"rendered":"<div class=\"aivoov-player-block\">\n\t<div class=\"read_this\">Read this article to me<\/div>\n\t\t\t<style>\n\t\t\t.plyr__controls .plyr__controls__item:first-child{\n\t\t\t\tbackground:#2e9c8e !important;\n\t\t\t}\n\t\t\t:root{\n\t\t\t--plyr-color-main:#2e9c8e;\n\t\t\t--plyr-audio-controls-background:#f0f2f4;\n\t\t\t--plyr-audio-control-color:#546a7b;\n\t\t\t}\n\t\t\t[data-plyr=\"mute\"]{color:#2e9c8e !important}\n\t\t\t.aivoov-text-color{color:#546a7b}\n\t\t<\/style> \n\t\t<div class=\"audio_player\">\n\t\t<audio class=\"js-player\" controls=\"\">\n\t\t\t<source src=\"https:\/\/monky-voice-over.s3.amazonaws.com\/aivoov\/781640cc-7bc1-4bbf-9492-22dedc19678b\/3a487bc6-05e8-4931-9d16-0dd3a20db9bb.mp3\" type=\"audio\/mp3\">\n\t\t\t<source src=\"https:\/\/monky-voice-over.s3.amazonaws.com\/aivoov\/781640cc-7bc1-4bbf-9492-22dedc19678b\/3a487bc6-05e8-4931-9d16-0dd3a20db9bb.mp3\" type=\"audio\/ogg\" \/>\n\t\t<\/audio> \n\t\t\t\t <div class=\"powerd_by aivoov-text-color\"><p><a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/aivoov.com\/?um_source=plugin_powered_by\" style=\"color: inherit;\">Powered by AiVOOV<\/a><\/p><\/div>\n\t\t \n\t\t<\/div>\n\t\t<\/div>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n <div class=\"faq-accordion faq-accordion191\">\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading0191\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse0191\" aria-expanded=\"true\" aria-controls=\"collapse0\">\n What is a purchase order (PO) finance? <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse0191\" class=\"collapse show\" aria-labelledby=\"heading0\" data-parent=\".faq-accordion191\">\n <div class=\"card-body\">\n <p><em>Purchase order (PO) finance is funding advanced to a supplier (from a finance provider) secured against a confirmed purchase order. It removes some of the financial pressures of fulfilling an order \u2013 especially a large order \u2013 by helping finance a transaction up until the time you raise an invoice.<\/em><\/p>\n<p>The purpose of finance is to allow the fulfilment of an order.<\/p>\n<p>The amount borrowed can be up to 90% of the value of the purchase order &#8211; the amount depends on the size of the order (i.e., the amount owed to you) and the creditworthiness of the company issuing the order.<\/p>\n<p>Terms range from 30, 60, 90, or 120 days. The cost is between 1.8% and 6% per month with 1-2 weeks to access capital.<\/p>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading1191\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse1191\" aria-expanded=\"true\" aria-controls=\"collapse1\">\n Why choose a purchase order finance? <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse1191\" class=\"collapse \" aria-labelledby=\"heading1\" data-parent=\".faq-accordion191\">\n <div class=\"card-body\">\n <p>How does purchase order finance work?<\/p>\n<ul>\n<li>You accept a purchase order (i.e., the form a buyer issues to a seller \u2013 your business is the \u2018seller\u2019 and your customer is the \u2018buyer\u2019).<\/li>\n<li>The purchase order becomes a legal contract.<\/li>\n<li>You submit the purchase order to the PO financing company for approval.<\/li>\n<li>The PO finance provider pays the supplier at cost \u2013 this payment enables your supplier to manufacture the product and deliver it to you.<\/li>\n<li>You send an invoice to your customer.<\/li>\n<li>Your customer pays you.<\/li>\n<li>You settle with your PO finance provider \u2013 you pay a transaction fee and interest on the money they advanced to your supplier. (You can usually use invoice finance to pay your PO finance provider if you prefer.)<\/li>\n<\/ul>\n<p>It\u2019s interesting to compare PO finance to <a href=\"https:\/\/swoopfunding.com\/ca\/knowledge-hub\/invoice-factoring\/\" target=\"_new\" rel=\"noreferrer\">invoice factoring<\/a> and <a href=\"https:\/\/swoopfunding.com\/ca\/knowledge-hub\/invoice-discounting\/\" target=\"_new\" rel=\"noreferrer\">invoice discounting<\/a>, where the lender advances you cash after you\u2019ve invoiced your customers \u2013 the cash advance is secured against these invoices (usually up to 90% of their value). In other words, this cash is advanced \u2018post-delivery\u2019 \u2013 once your customer has received your product or service. Once the customer has paid in full, your lender will send you the remaining balance minus their fees. By contrast, PO finance is \u2018pre-delivery\u2019.<\/p>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading2191\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse2191\" aria-expanded=\"true\" aria-controls=\"collapse2\">\n Is it suitable for an SME? <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse2191\" class=\"collapse \" aria-labelledby=\"heading2\" data-parent=\".faq-accordion191\">\n <div class=\"card-body\">\n <div class=\"flex flex-grow flex-col max-w-full\">\n<div class=\"min-h-[20px] text-message flex flex-col items-start whitespace-pre-wrap break-words [.text-message+&amp;]:mt-5 juice:w-full juice:items-end overflow-x-auto gap-2\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"6c50d14e-1f8a-4f81-a097-c5346eec50f8\">\n<div class=\"flex w-full flex-col gap-1 juice:empty:hidden juice:first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>You can use purchase order finance if you are a product distributor or reseller and need finance to fulfill a specific order. You can\u2019t use PO finance if you directly manufacture products or if you just want to build inventory.<\/p>\n<p>A minimum of two years of trading and $50,000 of revenue is required.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"mt-1 flex gap-3 empty:hidden juice:-ml-3\">\n<div class=\"items-center justify-start rounded-xl p-1 flex\">\n<div class=\"flex items-center\">\n<div class=\"flex items-center pb-0.5 juice:pb-0\">\n<div class=\"[&amp;_svg]:h-full [&amp;_svg]:w-full icon-md h-4 w-4\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"card\">\n <div class=\"card-header\" id=\"heading3191\">\n <h5 class=\"mb-0\">\n <a class=\"btn btn-link\" data-toggle=\"collapse\" data-target=\"#collapse3191\" aria-expanded=\"true\" aria-controls=\"collapse3\">\n Have you also considered? <\/a>\n <\/h5>\n <\/div>\n\n <div id=\"collapse3191\" class=\"collapse \" aria-labelledby=\"heading3\" data-parent=\".faq-accordion191\">\n <div class=\"card-body\">\n <p>You might want to consider <a href=\"https:\/\/swoopfunding.com\/ca\/knowledge-hub\/supplier-finance\/\" target=\"_blank\" rel=\"noopener\">supplier finance<\/a>, which is also \u2018pre-delivery\u2019.<\/p>\n<p>Supplier finance has two main advantages over PO finance:<\/p>\n<ul>\n<li>You can use it if you are a manufacturer (unlike PO finance).<\/li>\n<li>You can use it alongside existing financing (e.g., a line of credit) because it doesn\u2019t encumber assets. By contrast, a PO finance transaction is secured by your accounts receivable, so it may not work if you already have a lender in place (unless they subordinate their position).<\/li>\n<\/ul>\n<p>However, supplier finance comes with a limitation: your finance provider can buy products on your behalf only up to the amount that your business can be credit insured. So you might not be able to use supplier finance for very large orders \u2013 this is where PO finance has the edge.<\/p>\n<p>Also consider:<\/p>\n<ul>\n<li><a href=\"https:\/\/swoopfunding.com\/ca\/knowledge-hub\/asset-based-lending\/\" target=\"_new\" rel=\"noreferrer\">Selective invoice financing<\/a><\/li>\n<li><a href=\"https:\/\/swoopfunding.com\/ca\/knowledge-hub\/invoice-discounting\/\" target=\"_new\" rel=\"noreferrer\">Invoice discounting<\/a><\/li>\n<li><a href=\"https:\/\/swoopfunding.com\/ca\/knowledge-hub\/invoice-factoring\/\" target=\"_new\" rel=\"noreferrer\">Invoice factoring<\/a><\/li>\n<li><a href=\"https:\/\/swoopfunding.com\/ca\/knowledge-hub\/selective-invoice-discounting\/\" target=\"_new\" rel=\"noreferrer\">Selective invoice discounting<\/a><\/li>\n<li><a href=\"https:\/\/swoopfunding.com\/ca\/knowledge-hub\/spot-factoring\/\" target=\"_new\" rel=\"noreferrer\">Spot factoring<\/a><\/li>\n<li><a href=\"https:\/\/swoopfunding.com\/ca\/knowledge-hub\/confidential-invoice-finance\/\" target=\"_new\" rel=\"noreferrer\">Confidential invoice finance<\/a><\/li>\n<li><a href=\"https:\/\/swoopfunding.com\/ca\/knowledge-hub\/confidential-invoice-factoring\/\" target=\"_new\" rel=\"noreferrer\">Confidential invoice factoring<\/a><\/li>\n<\/ul>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n \n <script type=\"application\/ld+json\">\n    {\n        \"@context\": \"https:\/\/schema.org\",\n        \"@type\": \"FAQPage\",\n        \"mainEntity\": [\n                                {\n                \"@type\": \"Question\",\n                \"name\": \"What is a purchase order (PO) finance? \",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \"Purchase order (PO) finance is funding advanced to a supplier (from a finance provider) secured against a confirmed purchase order. It removes some of the financial pressures of fulfilling an order \u2013 especially a large order \u2013 by helping finance a transaction up until the time you raise an invoice. The purpose of finance is to allow the fulfilment of an order. The amount borrowed can be up to 90% of the value of the purchase order &#8211; the amount depends on the size of the order (i.e., the amount owed to you) and the creditworthiness of the company issuing the order. Terms range from 30, 60, 90, or 120 days. The cost is between 1.8% and 6% per month with 1-2 weeks to access capital.\"\n                }\n            },                                {\n                \"@type\": \"Question\",\n                \"name\": \"Why choose a purchase order finance?\",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \"How does purchase order finance work?  You accept a purchase order (i.e., the form a buyer issues to a seller \u2013 your business is the \u2018seller\u2019 and your customer is the \u2018buyer\u2019). The purchase order becomes a legal contract. You submit the purchase order to the PO financing company for approval. The PO finance provider pays the supplier at cost \u2013 this payment enables your supplier to manufacture the product and deliver it to you. You send an invoice to your customer. Your customer pays you. You settle with your PO finance provider \u2013 you pay a transaction fee and interest on the money they advanced to your supplier. (You can usually use invoice finance to pay your PO finance provider if you prefer.)  It\u2019s interesting to compare PO finance to invoice factoring and invoice discounting, where the lender advances you cash after you\u2019ve invoiced your customers \u2013 the cash advance is secured against these invoices (usually up to 90% of their value). In other words, this cash is advanced \u2018post-delivery\u2019 \u2013 once your customer has received your product or service. Once the customer has paid in full, your lender will send you the remaining balance minus their fees. By contrast, PO finance is \u2018pre-delivery\u2019.\"\n                }\n            },                                {\n                \"@type\": \"Question\",\n                \"name\": \"Is it suitable for an SME?\",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \"    You can use purchase order finance if you are a product distributor or reseller and need finance to fulfill a specific order. You can\u2019t use PO finance if you directly manufacture products or if you just want to build inventory. A minimum of two years of trading and $50,000 of revenue is required.             \"\n                }\n            },                                {\n                \"@type\": \"Question\",\n                \"name\": \"Have you also considered?\",\n                \"acceptedAnswer\": {\n                    \"@type\": \"Answer\",\n                    \"text\": \"You might want to consider supplier finance, which is also \u2018pre-delivery\u2019. Supplier finance has two main advantages over PO finance:  You can use it if you are a manufacturer (unlike PO finance). You can use it alongside existing financing (e.g., a line of credit) because it doesn\u2019t encumber assets. By contrast, a PO finance transaction is secured by your accounts receivable, so it may not work if you already have a lender in place (unless they subordinate their position).  However, supplier finance comes with a limitation: your finance provider can buy products on your behalf only up to the amount that your business can be credit insured. So you might not be able to use supplier finance for very large orders \u2013 this is where PO finance has the edge. Also consider:  Selective invoice financing Invoice discounting Invoice factoring Selective invoice discounting Spot factoring Confidential invoice finance Confidential invoice factoring \"\n                }\n            }          ]\n    }\n    <\/script>\n \n","protected":false},"excerpt":{"rendered":"","protected":false},"author":39,"menu_order":43,"template":"","segment":[296],"class_list":["post-2729","knowledge-hub","type-knowledge-hub","status-publish","hentry","segment-working-capital-finance"],"acf":[],"featured_image_urls_v2":{"full":"","thumbnail":"","medium":"","medium_large":"","large":"","1536x1536":"","2048x2048":"","image_blog":"","image_blog_full":"","image_podcast":"","image_banking":"","image_blog_internal":"","image_blog_medium":"","image_single_banking":""},"post_excerpt_stackable_v2":"<p>Read this article to me Powered by AiVOOV What is a purchase order (PO) finance? Purchase order (PO) finance is funding advanced to a supplier (from a finance provider) secured against a confirmed purchase order. It removes some of the financial pressures of fulfilling an order \u2013 especially a large order \u2013 by helping finance a transaction up until the time you raise an invoice. The purpose of finance is to allow the fulfilment of an order. The amount borrowed can be up to 90% of the value of the purchase order &#8211; the amount depends on the size of&hellip;<\/p>\n","category_list_v2":"","author_info_v2":{"name":"Alexandre Colucci","url":"https:\/\/swoopfunding.com\/ca\/author\/alexcolucci\/"},"comments_num_v2":"0 comments","_links":{"self":[{"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/knowledge-hub\/2729","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/knowledge-hub"}],"about":[{"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/types\/knowledge-hub"}],"author":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/users\/39"}],"version-history":[{"count":1,"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/knowledge-hub\/2729\/revisions"}],"predecessor-version":[{"id":36935,"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/knowledge-hub\/2729\/revisions\/36935"}],"wp:attachment":[{"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/media?parent=2729"}],"wp:term":[{"taxonomy":"segment","embeddable":true,"href":"https:\/\/swoopfunding.com\/ca\/wp-json\/wp\/v2\/segment?post=2729"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}