Purchase Order Financing

Financing to Get Your Suppliers Paid & Orders Fulfilled

FAST AND AFFORDABLE BUSINESS FINANCING:

Monthly factor rates as low as 1.25%
Flexible terms to fit your business needs
5-minute application
Approval in as little as 4 hours

EASY ACCESS TO CASH FLOW:

No personal credit requirement
Fund up to 100% of the total cost of goods
Factoring lines from $200K – $7 Million

Stop Turning Down Orders!

All too often, businesses that produce physical goods are forced to turn down orders because they simply don’t have the cash flow to cover their supplier costs. Turning down an order has far reaching implications – not only is there lost sales revenue, but businesses also have to contend with the negative impact this will have on the relationship with that customer in the future. Add to that the loss in brand awareness that could have come out of that sale, and it’s easy to see why Purchase Order Financing – also known as Purchase Order Factoring or PO Financing, is a great option for many businesses.

Why Consider Purchase Order Financing (PO Financing)?

PO financing is a short-term financing option where a lender will pay your suppliers directly to cover materials and production of your order. In some cases, if your gross margin is expected to be large enough, 100% of the cost can be covered. This financing product allows you to accept orders that you may not have been able to otherwise, without you having to take on large amounts of new debt.

Grow Your Business
The goal of most companies providing physical goods is to grow – they want to get their product everywhere. However, the cost of materials and production can be prohibitive, taking up all available working capital. PO financing allows you to take on these big orders and grow your business without sacrificing cash flow.

Keep Your Reputation
One of the primary ways to ensure a successful business is by fostering good relationships with clients, vendors, and employees alike. PO financing makes it possible to fulfill orders and cover supplier costs without impacting your ability to cover operational costs (like payroll) – keeping your relationships and good reputation intact.

Improve Cash Flow
With PO Financing, you’re able to accept and fulfill orders without dipping into your existing funds or taking on new debt. This means you can continue to bring in sales revenue with little to no upfront costs and no interruption in day-to-day operations due to a lack of working capital.

Outsource Invoice Collection

A little recognized benefit of PO financing is that your lender will actually take on the responsibility of payment collection from your customer order. This saves you the time, resources, and money you would typically need to put into following up on client invoices.

Everything you need to know about PO Financing

At first glance, PO financing can seem a bit complicated, involving many parties – you, your lender, your suppliers, and your customers. But, in reality, it’s quite simple and a great financing option for businesses that don’t have available cash, can’t (or prefer not to) get a business loan, and/or have limited credit with suppliers. Here’s how PO Financing works, step by step:

1. A customer places a purchase order with you for the product.

2. You get a written proposal from your supplier on the cost of the order.

3. You apply for PO Financing.

4. Once approved, your financing company submits a purchase order to your suppliers.

5. Your supplier sends your financing company an invoice.

6. Your financing company pays your supplier.

7. The supplier fulfills the order and provides your customer with the goods.

8. You invoice your customer and also send the invoice to your financing company.

9. Depending on your agreement, your customer pays you and you pay your financing company, or your customer pays the financing company directly, and your financing company will send you your remaining balance minus any fees.

Yes, there are a few more steps to the process than what comes with traditional financing; but the entire transaction is seamless, and the outcome is a win-win for all. You make a great sale, your suppliers get paid and your customers get their product.

Do I Qualify for PO Financing?

One of the best things about PO financing is that, similar to invoice or accounts receivable factoring, approvals are not based on your personal credit score. Because funds are being fronted directly to your supplier, and payment is received directly from your customer, approvals are based on their creditworthiness.

General approval requirements for PO Financing include:

You must have a B2B (business-to-business) or B2G (business-to-government) company.
You must provide physical goods.
Your supplier must have good business credit.
Your customer must have good business credit, trade, and payment history.
Your order must have a profit margin of a minimum of 1 percent.

How To Apply?

Applying for PO financing arranged by Kapitus® is simple, despite the number of steps that come along with this type of financing! Completing the application should only take minutes.

To get started, simply fill out our online application, upload your three most recent bank statements, the Purchase Order from your customer, and cost estimate from your supplier…and you’re all set! Once your package has been submitted, a Kapitus Financing Specialist will be in touch with a decision and next steps.

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Who Should Use Purchase Order Financing?

Kapitus PO Financing is available to any B2B and B2G business that provides physical goods to its customers. Here are the industries that most frequently use PO financing:

Manufacturers
Wholesalers
Distributors
Outsourcers
Resellers

1 We silence the noise on the internet

There is SO MUCH INFORMATION on business financing available through the internet. Determining what information is correct, which lenders are trustworthy and which financing option is right for you can seem like an impossible task. We’re here to put an end to the noise. As specialists in the small business financing industry for 15 years, we’ve stayed on top of this ever-changing landscape. Our financing specialists are rigorously trained to have in-depth knowledge of how each financing product works and the situations in which each product is best applied.

2 And in your head

We value and use data just as much as the next guy. But, we also know that businesses are run by humans, and that many times a fully data-driven scenario is not the appropriate course of action. This is why we take a consultative approach when helping small businesses seeking financing. We listen to your situation. We get a thorough understanding of your needs. We prioritize your wishes around the type of funding you are looking to acquire. We put your mind at ease by helping you find the best possible financing solution for your business.

3 No Financial
Smoke & Mirrors

With Kapitus, what you see is what you get. We keep the best interests of our customers at the center of the financing experience by being up-front about every aspect of the application and funding process. At Kapitus, our core tenets are transparency, fairness and integrity – this is how we empower business owners to make educated financial decisions and keep their businesses thriving.

FAQs

Q: What is factoring?

A: Factoring is a type of financing where a lender provides a monetary advance based on outstanding invoices for services and goods that have already been provided. They do this by purchasing invoices from you at a discounted rate. Factoring is used to mitigate cash flow problems that arise from slow-paying customers.

Q: How is PO financing different from factoring?

A: Invoice factoring and purchase order financing (also sometimes referred to as supplier financing, purchase order funding, trade financing, or accounts payable financing) are often confused with one another. However, there are some very significant differences:

Timing: You use invoice factoring after you have submitted an invoice to your customer for goods and/or services already provided, while purchase order financing is used prior to delivering finished goods to your customer. Essentially, factoring is used for accounts receivables, and PO financing is used to cover the supplier costs for an orders that has not yet been filled.
Uses: Invoice factoring can be used by companies that provide goods and/or services, whereas purchase order financing is available only to those companies that provide physical goods.
Release of Funds: With invoice factoring, funds are given directly to you, the business owner. With PO financing, funds are dispersed directly to your suppliers to provide materials and produce the goods.

Q: Am I required to finance all of my customer’s purchase orders?

A: No, there are no requirements around which purchase orders you finance. Most businesses choose to use PO financing only on those orders that would place a significant and debilitating strain on their available cash flow.

Q: How much of my supplier costs can I get covered?

A: The amount of supplier costs that you can get covered through PO financing depends upon the expected profit margin of the order and the creditworthiness of both your suppliers and your customer.

Resources – Understanding Purchase Order Financing

a list of the types of loans for dentists

Should I Use Purchase Order Financing? When Does It Make Sense?

There is a great deal of misinformation and erroneous assumptions around purchase order financing. You know what a purchase order is but how do you finance it?

Purchase Order Financing For Government Contracts

If you do decide to try and take a slice of the government pie by bidding on a contract, you’re most likely going to need PO financing, since most government contracts require a large amount of materials…

Financing for Business Expansion

How do you find financing for business expansion, when the time is right?

Purchase Order Financing

Get A Free Quote Today

Why Consider Purchase Order Financing (PO Financing)?

Everything you need to know about PO Financing

Do I Qualify for PO Financing?

How To Apply?

Who Should Use Purchase Order Financing?

1

We silence the noise on the internet

2

And in your head

3

No Financial Smoke & Mirrors

FAQs

Resources – Understanding Purchase Order Financing

Should I Use Purchase Order Financing? When Does It Make Sense?

Purchase Order Financing For Government Contracts

Financing for Business Expansion

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No Financial
Smoke & Mirrors