We Deliver The FUNDS
We Deliver The FUNDS
Purchase Order Financing
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P.O. funding is our business:
What is Purchase Order Financing?
Purchase order financing is a funding solution that helps businesses fulfill large customer orders by providing the capital needed to pay suppliers for goods. It’s especially useful for companies that receive more orders than they can afford to produce.
P.O. Financing involves a specialized lender that provides transactional financing to a vendor/business (the Applicant) to help process an order requested by a credible account debtor (Customer being sold to).
With purchase order financing, businesses can confidently accept larger orders without worrying about cash flow limitations. This type of funding ensures that suppliers are paid on time, preventing production delays and maintaining strong relationships with vendors. It also allows companies to take advantage of growth opportunities and expand their market presence without needing to secure traditional loans or dip into their own reserves. By leveraging purchase order financing, businesses can fulfill customer demand, increase revenue, and scale operations more effectively.
Purchase order financing is our business for over 20 years.
Fast Approval Process
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3 to 5 Day Initial Setup
Light Assembly Accepted
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Purchase Order Financing is our Business for over 20 Years.
Fast Approval Process
3 to 5 Day Initial Setup
Light assembly accepted
What makes 1st Commercial Credit one of the best purchase order finance companies in the market?
We offer a broad selection of purchase order funding programs for your manufacturing and distribution business. Including domestic or international trade financing needs. Purchase order finance is available for U.S. based companies with a proven track record in their industry.
Our areas of expertise include all of the supply chain finance segments including invoice factoring and extended terms to Buyers.
1st Commercial Credit provides funding for 3 types of purchase order requests. Please note that the client must already be factoring receivables in order to apply for our purchase order finance program.
Finished Goods PO Finance
Finished and packaged product is the most common inquired type of p.o. finance needed by our clients. USA based importers that need to pay overseas suppliers, logistics and duty fees are funded very easily.
Light Assembly Finance
This type of financing is higher risk due to the inventory arriving at the client’s place of business and having to assembly or manufacture some items to get it to a finished product. The client must have a good track record and consistent delivery performance in the past with the items to be financed. Financing can include cost of labor and import duty fees.
Production Finance
1st Commercial Credit provides production financing only with existing clients that are already factoring. Must have 2 years in business, historical sales of items to be submitted for funding, strong financially stable suppliers, profitable client in good standing, current on rent with landlord, taxes and 941 obligations. Financing includes raw materials, logistics cost, import fees and labor.
Custom structures are made for each client because not every purchase order finance request is the same. Alternative funding such as short term transactional funding options are available if the client cannot meet our standard purchase order financing criteria.
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What Should a Purchase Order Always Mention About the Transaction?
A small business does not need an expensive legal department to understand how a purchase order works. The biggest misconception about a purchase order is that it is a legally binding document. This is true, but only under certain conditions.
In order for the purchase order to be legally binding, both parties must agree to it and the vendor must satisfy all of the conditions of the purchase order. That means that a vendor cannot collect on a purchase order until it has done its part to satisfy the order.
The wording on a purchase order is critical to its success. Most companies get purchase order forms that outline all of the blanket conditions of the transaction. A blanket condition is something that applies to every order. Examples of blanket conditions include the payment options, return policies and shipping policies. The information that is specific to that order is also important when being printed on a purchase order.
Payment Terms
This section will outline the payment terms of a successful purchase order transaction as the buyer understands them. If the seller has a different view of the payment terms, then that should be discussed before the purchase order is made final.
Delivery Date
There are two specific elements of the delivery date that should be included on every purchase order. The first element is the date itself. In most cases, the delivery date is negotiated between the seller and buyer in advance of creating the purchase order. The other element that should be included is an indication as to whether or not that delivery date is firm. If a product is critical to the success of a project, then the customer may need the delivery date to be firm. If the product is not critical, then a flexible delivery date can make the relationship between the buyer and seller much smoother.
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Product Or Service Details
The product or service details need to be extremely comprehensive. These are some of the more important conditions that the vendor will be held to when it comes time to pay on the purchase order. The buyer needs to outline the exact terms of the service or specifications of the product on the purchase order for it to be effective. A general or vague product or service description could wind up causing confusion and delay payment.
All Pricing
A purchase order should include the unit price, the number of units, the total price, a subtotal, any shipping and handling charges, any taxes or other fees and then a final purchase order price. The complete purchase order pricing goes right along with the product or service details as one of the more important parts of the purchase order. Be sure to include all elements of the pricing on the purchase order so that there can be no confusion between the buyer and the seller.
Contact Information
It is always interesting to see how many companies forget to put complete contact information on a purchase order. If this information is not complete, then the vendor may not know who to contact if there is an issue.
Comprehensive Shipping Information
If a buyer does not want his product shipped to the wrong location, then be better check his shipping details on the purchase order before issuing the order. A vendor will ship to whatever location is on the purchase order. If the customer has special shipping instructions and does not include them on the purchase order, then the buyer will have created an issue that the vendor will not be responsible for.
What is the Purchase Order Financing Criteria
What Is Considered In A Purchase Order Finance Transaction?
- Industrial and Manufacturing
- Wholesale distributors/ importers and exporters
- Government Contracts
- Service Contracts
- Retail and Apparel
- Direct shipment/Drop ship orders
Project funding for the following costs:
- Raw Materials
- Components and Sub-Assemblies
- Project-specific Labor
- Finished Goods
- Overhead
- Direct Manufacturing
- Shipping
- Letters of Credit
- Letters of Guarantee
Purchase Order Financing (Rates and Fees)
When evaluating purchase order financing for your business, it's important to be aware of the costs involved. At 1st Commercial Credit, we provide transparent and competitive rates, usually ranging from 1.5% to 5%. Our purchase order financing solutions supply the necessary funds to pay suppliers, allowing you to meet large orders and expand your business without financial strain. Whether you need to cover supplier expenses, accommodate increased demand, or capitalize on new opportunities, our financing services offer an affordable way to support your company's growth and maintain financial health.
FAQ About Purchase Order Financing
Businesses that receive large or unexpected orders but lack the cash flow to fulfill them can benefit from this service. It is especially helpful for wholesalers, manufacturers, distributors, and importers that need to bridge the gap between supplier payments and customer receivables.
Unlike traditional loans, purchase order financing is not based on your credit history but on the strength of your purchase order and the creditworthiness of your customer. It also doesn’t add debt to your balance sheet, as the financing is repaid directly from customer payments.
Yes, it can be used alongside other financing options like invoice factoring. Once the goods are delivered and the invoice is generated, you can factor the invoice to further improve cash flow and cover other business expenses.
