Authored by Phil Cohen
The COVID-19 pandemic is not only impacting the nation’s health, but also its economy. It can be especially difficult for mid-to-large businesses that work with suppliers or are a part of a supply chain. Without a steady cash flow, product can be put on hold – something all parties want to avoid. If your business is experiencing cash flow problems and not able to pay suppliers due to the downturned economy, we might be able to help you by offering purchase order funding during COVID-19.
You Need:
- To steady cash flow
- To pay suppliers so they release product
- A simple solution to the two bullet points above
We Offer:
Purchase order financing (aka purchase order funding), a fast and simple way to pay suppliers and balance cash flow that is:
- flexible
- not limited to your business’ location
- contact-free – the process is done online and over the phone
While the offer sounds too good to be true, we promise it’s not. You might have some questions surrounding purchase order funding during COVID-19, so we have set out to answer some of the most common ones for you.
What is purchase order funding?
Purchase order funding, also known as purchase order financing or PO funding, is a funding option for businesses in the wholesale or distribution industry that lack the capital to fill orders they receive.
While purchase order funding is simple, it is a little more complicated than traditional invoice factoring. Don’t worry, though, you will have access to PO funding experts who will guide you through the process.
How do I qualify for purchase order financing?
The requirements for purchase order financing are more specific than the ones needed for general factoring. You need:
- A gross profit for transactions (at least 20%)
- Experience with similar customers in a similar situation
- A first transaction of at least $100,000
- Qualified purchase orders or letters of credit
How does purchase order funding work?
Purchase order funding works like this. Once approved:
- You will submit the purchase order to the PO funder you’re partnered with.
- The factor will directly pay the supplier for the purchase order.
- Once the supplier delivers the product, you will issue an invoice to the customer.
- You will sell that invoice to the factoring company in order to be advanced the money through the accounts receivable factoring process.
- The invoice factoring company will pay the PO funder and then will advance the remaining invoice to you, minus a small factoring fee.
How can using purchase order funding during COVID-19 help my business?
Using purchase order funding during COVID-19 can help your business finance purchase orders during an extremely unpredictable economic time. With banks and other funding solutions reducing the number of loans or lines of credit they give out, having a reliable way to manage your finances and keep your business in operation is needed.
If my business uses purchase order funding during COVID-19, what can we use the capital for?
Capital from purchase order financing is used to do just that, finance large purchase orders like government contracts, wholesale distributors, direct ship and drop ship orders and more.
Purchase order financing during COVID-19 can help your company operate as smoothly as possible during the current business climate. If you want to turn your purchase orders into cash receivables, let us help you.
Whether your business is still operating as it was pre-pandemic, or if its model has changed to better serve the COVID-19 curbing efforts, we are here to assist you in any way we can.
If you’d like more information on purchase order financing during COVID-19, give us a call. Our trained financial experts can talk you through different ways P.O. financing can help your business in particular as well as answer any questions you may have about the process.
If you’re interested in a free purchase order financing quote, simply fill out this form and one of our account managers will get in touch with you to discuss your options and pricing.