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What is a purchase order?

A purchase order is a document used in businesses issued by a business to its customers, indicating types, quantities, and agreed prices for products or services the businesses will provide to the customers.

  • Sending a purchase order to a customer constitutes a legal offer to buy products or services.
  • Acceptance of a purchase order by a customer usually forms a one-off contract between the customer and business
  • No contract exists until the purchase order is accepted.

What are the advantages of a purchase order?

  • A purchase order allow buyers to clearly and explicitly communicate their intentions to sellers
  • By using purchase orders the company is are protected in case of the customer’s refusal to pay for goods or services.
  • A purchase ordering system can assist a purchasing department manage incoming orders and pending orders.
  • The use of purchase orders improves the purchasing process to a standard procedure.

What is purchase order financing?

Purchase order financing is a variation on traditional factoring. Purchase order financing is a financing option for resellers or distributors of hard goods. Hard goods are any type of tangible products that are intended to remain functional for an extended period of time.

Purchase order financing is a method where a business can gain access to funds tied up in new forward ordered contracts. Purchase order financing is very specialist and not is available to all. The risk for a financing company is that they are taking on a significant debt and a contact with a third party with no guarantee that the contract will be fulfilled.

The underwriting of purchase order financing business is heavy based on verification and inspection of a letter of credit. They may also require a separate audit and evidence of past trading history between contractual parties.

Types of purchase order financing

  • Purchase order financing loans
  • International purchase order financing
  • Government purchase order financing

Advantages of purchase order financing

  • Purchase order financing speeds up the cash flow cycle.
  • Purchase order financing provides business with much need capital to compete with large and more established businesses.
  • Purchase order financing provides money needed for working capital.

Who provides purchase invoice financing?

  • Some banks do some purchase order financing
  • There is some niche dedicated purchase order financing companies.

Purchase order financing at competitive rates is available. Call 0800 597 4757 today to learn about our affordable purchase order financing rates in the UK