Stanton Financing Guide

If you ask the owner of a successful re-seller or importer company to identify their biggest challenge, their common answer will be: lack of working capital. Working capital is the lifeblood of all resellers and importers, enabling them to pay suppliers and allowing them to grow their businesses. Many times, their ability to grow is directly linked to their access to working capital.

So, where do re-sellers that wish to take their businesses to the next level go to get working capital? The bank? Unlikely, as banks are tough sources of business financing. To qualify for a business loan you’ll usually need to provide reports showing three years worth of profitable operations – and – the owner will need to have a spotless credit record. Oh, and if you are a startup, don’t bother. Few banks will provide working capital to startups.

Are there any alternate options? Fortunately, the answer is yes. Purchase order financing (commonly known as po funding) is a great source of financing for startups and growing companies that have exhausted their bank financing options. However, you won’t find PO Funding at your local bank, you’ll find it at your local factoring company.

PO funding is an ideal source of financing for resellers, wholesalers, importers, or just about any business that buys goods from third parties and resells them. PO financing covers up to 100% of your supplier expenses, enabling you to close big sales and deliver on them. As opposed to traditional financing, purchase order financing uses your purchase order as the actual collateral. There are no set maximum limits, and you can finance as many orders as you want, provided that they come from commercially credit worthy businesses or the government, and have profit margins of 15% or more.

Purchase order funding works as follows:

1. You get a purchase order from a client. You place an order with your supplier

2. The purchase order finance company pays your suppler using a letter of credit

3. Your supplier delivers the product and your client acknowledges receipt

4. Your client pays for the goods and the transaction between the parties is settled

Purchase order financing can be an affordable financing option that allows you to expand your business when your bank financing options have been exhausted. It can truly enable you to close very large orders, with confidence, and take your business to the next level.

About Commercial Capital LLC
Are you looking for purchase order funding? We can provide you with a competitive po financing and po funding quote. Please call (866) 730 1922 for more information.

Do you sell to the government or to large companies? Do you regularly get purchase orders that stretch your company’s ability to deliver? Lastly, if you had financing to cover all your supplier costs, could you sell more? Much more?

If you answered yes to any of these questions, then purchase order financing could help your business grow.

Purchase order financing is a way of financing sales that has been gaining popularity with US and Canadian businesses. It offers a very simple proposition. If you have an order from a large credit worthy business (or government agency), then the financing company will provide you with the necessary funding to fulfill your supplier payments and make the sale. Call it sales based financing. It works well for resellers, distributors and wholesalers, although it can also be used in other industries.

Here is how purchase order financing works. Let’s say that you own a company that has been getting progressively larger orders, tightening your cash flow. After setting up a purchase order financing agreement, this is how your sales financing would work:

1. You get an order from a client
2. The purchase order finance company handles up to 100% of your supplier payments (by direct payment or letter of credit)
3. The order is fulfilled and the goods are delivered
4. The transaction is settled, once the client pays their invoices

As you can see, purchase order financing allows you to leverage the resources of the financing company and allows you to increase your sales. With PO financing, lack of cash flow will never be a reason to lose a sale.

As opposed to a business loan from a bank, purchase order financing is very easy to obtain and can be set up in days. The main requirement is to have valid orders from good commercial or government clients. Most banks won’t offer this type of financing, but you can get it from a factoring company. As a matter of fact, purchase order financing and invoice factoring are frequently combined to help reduce the costs of the transaction.

So, if your purchase orders are piling up, be sure to consider financing with purchase order funding.

About Commercial Capital LLC
Interested in purchase order financing? We are purchase order finance experts can provide you with a purchase order financing proposal. For more information, call Marco Terry at (866) 730 1922 (toll free USA / Canada).

One of the biggest thrills that you will get as a business owner is getting a large order from a great customer. The sort of order that lets you ring the cash register and take your business to the next level. Unless, of course, you can’t afford to pay your suppliers. Then you risk losing the client, the order and this big opportunity.

Going to the bank to try and get financing is often an exercise in futility. Unless your business has strong assets, three years of operating history and audited financials, there is little chance that a bank will provide financing such as a business loan, line of credit or letter of credit. However, there are other alternatives. If you own a company that is a distributor, reseller, importer or wholesaler you should consider purchase order financing.

Purchase order financing provides you with the necessary funding to pay your suppliers, deliver the products and ultimately make the sale. As opposed to most bank financing, it is relatively easy to qualify for. The main requirement is that you have purchase orders from good customers, make at least $50,000 a month in sales and have profit margins of 20% or more.

The transaction is relatively simple. Once you know you’ll get the purchase order, you set up an agreement with the financing company. Once the agreement is in place, the financing company will take care of paying your suppliers and ensuring proper product delivery. The transaction is settled once the customer pays for the product, usually 30 or 60 days after delivery.

Usually, purchase order financing is used in conjunction with invoice factoring. This enables you to streamline your cash flow and reduce your costs, since invoice factoring is cheaper than purchase order funding.

Purchase order funding lets you make sales that you cannot afford to make (or lose!) and provides you with the financial platform and backing to grow your company.

About Commercial Capital LLC

We are a business financing company that can provide you with purchase order funding, purchase order financing or a letter of credit.

Copyright (C) 2006 – Commercial Capital LLC – Article may be reprinted if it is not modified and if all links are kept intact.

Getting a large order from your best customer can be one of the best things that happen to your business, if you have the financial resources to deliver it. If you don’t, getting a large order can be a true nightmare. Unless you find a way to deliver it, you risk losing both the order and your customer.

So, if your company needs money, your best bet is to go to the bank, right? Well, not really. At least, not unless your company has a long track record of profitable operations and can show audited financial statements. But what happens if your company is a startup or just not well capitalized?

If you resell goods as a reseller or wholesaler, the solution may be to use purchase order financing.

Purchase order funding works by providing the financing to deliver on the sale, while taking the purchase order as the actual collateral. Now, that is something that you won’t find at you local bank. And since the purchase order is the “collateral”, the biggest requirement to qualify is that you get purchase orders from reputable clients or government agencies.

Here is how a transaction works:

1. You get a purchase order from a large customer
2. The po financing company pays your suppliers, usually via a letter of credit
3. Your suppliers deliver the goods and you complete the sale
4. The transaction is settled once your customer pays for the goods

Since purchase order funding allows you to take large orders, when used properly, it can be a tool that fuels explosive growth. However, purchase order financing does not work for every business. To benefit from purchase order funding:

1. Your business must sell goods – not services
2. You must be a reseller or wholesaler
3. Your profit margins must be of at least 15%

It is quite common combine purchase order financing with some type of invoice financing, such as invoice factoring. The advantage of factoring invoices to refinance your po financing transaction is that it may help reduce your overall transaction cost, increasing your profitability.

About Commercial Capital LLC
Is a leading provider of purchase order funding and po financing. For a po funding quote, please call (866) 730 1922.

A letter of credit is a financial tool that streamlines the process of doing business both nationally and internationally. It provides a guaranteed (usually) form of payment to your suppliers while limiting your risks in the transaction. To better understand letters of credit, let’s look at an example.

Let’s say that you own a widget distribution company. Let’s also say that your good customer provides you with a very large purchase order for widgets. Since you distribute (rather than manufacture) widgets, you’ll need to place an order with your widget supplier to be able to fulfill the order. In this case, you want to use a new widget supplier that is located in Asia and does not know much about your company.

Your first step is to try to buy widgets from your Asian supplier. Now you have an interesting situation. Your supplier is very likely to ask for cash up front or some guaranteed form of payment before manufacturing and delivering the widgets. You, on the other hand, will want to pay upon receipt, or better yet, ask for 30-day payment terms (meaning, you pay 30 days after receipt). As you can see, both parties are trying to limit their risk.

To solve this situation you can go to the bank and ask them to create a letter of credit for this transaction. The letter of credit stipulates that your supplier will be paid by the bank, if they comply with the terms of the L/C. Usually, to comply with a letter of credit, documentary evidence that proves delivery of a quality product per the agreement needs to be provided.

Now your supplier can go ahead and deliver the widgets, knowing that he will be paid if he delivers according to the agreement.

As you can see, this protects your supplier, and the letter of credit also protects you, because it ensures that the supplier is paid only if he complies with the agreement. Although letters of credit come in a number of flavors, in general they tend to guarantee payment by the issuing bank, which gives suppliers a level of comfort.

Of course, once funds are paid to your supplier you will need to pay the bank. Usually, banks will ask that you have a line of credit (or similar financing) so that they can satisfy payment for the LC from that account. Unfortunately, this also means that to qualify for a letter of credit you almost always need to qualify for traditional bank financing. This is not easy for new, small or growing businesses. If you cannot qualify for a letter of credit, your best alternative is to secure trade financing use purchase order financing.

About Invoice Factoring Group
We are business financing specialists and can provide you with a letter of credit or purchase order financing. Marco Terry, the president, can be reached at 866 730 1922

Copyright (C) 2006. Commercial Capital LLC. Article may be reprinted if it is not modified.

Knowing the ends and outs of purchase order financing is an asset to almost any small or medium sized business owner. In the sections below you will learn just exactly what purchase order financing is, the benefits, drawbacks, who can benefit the most from it, and would be likely to qualify for it.

What is purchase order financing?

Purchase order financing is another way to get a loan for the capital you need to finance the supplies, production, and shipping of a product after you have received a purchase order from a buyer. Once you produce the finished goods and are paid, you can then pay off your invoice to the company who provided you with funding.

This is a perfect solution for small start-up businesses who have orders coming in but don’t have the finances required to order supplies, pay their workers, and ship the finished goods. This would also be a great opportunity for a small to medium sized businesses who have found themselves with a sudden large customer jump or are graced with a very large order.

Who can benefit from purchase order financing?

- Purchase order financing is great for small to medium sized businesses who usually do not have the funds for large orders that could sky rocket their sales and turn their product into a household name. Image pitching your product to a major retailer, receiving an order from them, and then not being able to produce the goods needed because you are short on funds. purchase order financing could save you from this heart-breaking, and business-breaking, blow.

- A company who has received an order so large that they would need a six-digit loan. A purchase order financing company is not there to finance every single order so that a business does not have to spend any money up-front, it is merely a means for businesses to get the funds they need for an order that would otherwise be out of their reach financially.

- Only those who are reselling an already made product that they have to purchase in order to send to the buyer, such as drop shippers, or are
producing a product to sell may be eligible to receive purchase order financing.
For example, if you are selling a service, you would not qualify to receive purchase order financing. Although it may take capital you do not have to hire employees to perform the service, it would still not qualify under most company
guidelines.

What are the drawbacks of purchase order financing?

There are few drawbacks to receiving purchase order financing, however, there is one major qualification that could potentially stand in your way. When a company grants you funding, they assume they will be paid after your
customer receives the finished product and pays you. Because of this, many funding companies will check the credit of your buyer(s) to be sure that you will not get ripped off and be left without the money to pay your invoice. Purchase order financing companies are not only taking a chance on you, they are taking a chance on your customers as well. They are the ones with the real risk if the deal goes sour. Knowing that your customer is credit worthy gives the company the peace of mind to lend to you.

What to look for in a purchase order financing company

You should find a company that is right for you. These guidelines may help you better understand what type of company you should apply with:

- Find out what their minimum and maximum funding guidelines are to ensure that they meet your financial need. If a company only funds loans that are in excess of what you are looking for or has restrictions that are less than what you need then you are best moving on to another company.

- Find out what other eligibility requirements they have to
ensure that you do qualify under their guidelines before you waste any time applying for their loan.

- Find out what length of time you have to repay the loan and
check to see if it meets with you production and billing schedules to ensure that you will have the funds in time.

- Once you have found a company that works for you, make sure
that they have a fee or interest rate that your company can both afford and be comfortable with.

In the world of loans and financing, purchase order financing may be a small business’s best ally. They will usually have repayment terms that allow time for production of a product and it is the fastest way to receive financing without losing any investment in your business. Also, since they will check into the credit worthiness of your buyers, they may save you from producing a product for a deadbeat buyer. All in all, purchase order financing is a way to finance a large order that may get your product into the hands of a top notch retailer.

David Springer is a consultant for Sovereign Funding Group. Sovereign Funding Group is an experienced, reputable company that offers convenient, no-risk services to help you with the selling of your deferred payments and business financing including purchase order financing.

Let’s say that your business suddenly gets a big order from your best client. However, it is an order that is clearly too big for you. What would you do? If your business has a good banking relationship perhaps you may be able to tap into a line of credit or a bank loan. But what happens if your business is small or new and you have no banking relationship? Do you turn the customer away? Fortunately, you don’t have to. Purchase order (PO) financing may be able to help you secure the sale and deliver the order.

What can purchase order funding do for you?

Purchase order funding is a tool that allows you to finance your big orders. It provides the necessary funding to fulfill orders that otherwise you could not afford to deliver. When used correctly, it can enable you to grow your company quickly

As opposed to bank financing, purchase order funding does not rely on your company’s financial strength. Rather, it relies on the financial strength of your customers. This means that if you sell products to large companies or to government entities, purchase order funding can be the ideal option to finance those sales.

Who is a good candidate for purchase order financing?

To qualify for purchase order financing, your company must sell products rather than services. An ideal candidate for this type of financing would be a product re-seller or distributor who is buying products from a supplier and then shipping the products to the client. Purchase order financing can also work in instances where products are sold in conjunction with services (e.g. maintenance), however, the product part of the order must be separate from the services component.

The business case for PO financing

PO financing is simple to use. The po financing company buys the products from your suppliers in your name, using a letter of credit or similar instrument. It then ensures that the products are properly delivered to your client. Once the order is delivered and approved by your client, the funds from the letter of credit are released to your supplier.

At this point, the order has been delivered and an invoice is issued. Most invoices take 30 to 60 days to pay. Once an invoice is paid, the transaction between the parties is settled. It is common to combine po financing with receivables factoring because this enables you to reduce the total cost of the transaction.

Receivables factoring is a type of financing that provides you with financing based on your receivables (or invoices) for delivered products. Usually, once an invoice is generated, the invoice is factored and the funds are used to close the po financing facility. This is done because the rates for po financing tend to be higher than the rates for factoring receivables. This little trick can help you save money and realize greater profits.

Although po financing is a great tool, it does not work for every company. However, if you have margins of at least 20% and good paying customers, you should be able to benefit from it.

About Invoice Factoring Group

Invoice Factoring Group is a factoring company that can provide you with a free receivables factoring or purchase order funding quote. Marco Terry, the president, can be reached at (866) 730 1922.

Copyright (c) 2006 Commercial Capital LLC. All rights reserved. Article may be reprinted freely, provided it is not modified and all live links are included.

Running an import / export company can be very rewarding and profitable. The US market for Asian imports has been growing at a dizzying speed, allowing many companies to reap the benefits. However, with growth, comes the concern about how to finance it.

The challenge is simple. Most importers must pay their own suppliers immediately when placing an order. However, they are also forced to extend credit to their own customers and wait to be paid until 30, 60 or 90 days after delivery. Few importers can wait that long to recoup their money, especially since many have multiple orders open at the same time.

Importers that qualify for bank business financing programs, such as a business loan, can usually take orders until they exhaust their bank financing. Smaller businesses can only take orders until they exhaust the owner’s capital. Either way – once the owner’s capital or the bank financing is exhausted, business stops. But it doesn’t have to. Not if the importer starts using purchase order financing.

Purchase order funding is a great financing alternative, that allows importers to grow past their own (or their banks!) financial limitations. It provides the necessary financing to pay supplier costs, allowing the importer to make the sale and deliver their orders with confidence.

A big difference between purchase order funding and conventional financing is that banks look for tangible things (real estate, etc.) as collateral. Factoring companies (who provide po funding), on the other hand, consider your purchase orders from reliable clients to be solid assets that can be leveraged.

Purchase order funding is simple to use and works as follows:

1. You get a large purchase order (or po) from a customer

2. The purchase order finance company pays your supplier by letter of credit. Your supplier delivers the goods to your client

3. Your client receives the goods and pays for them. The transaction is settled and concluded

As opposed to bank financing, purchase order financing is relatively easy to obtain and can be set up in about a week or so. Although rates are very affordable, po financing works best in transactions where the margins are at least 15%.

About Commercial Capital LLC
Are you looking for purchase order funding? Commercial Capital can provide you a po financing and po funding quote by calling (866) 730 1922