The following information will be the first in a series to help understand the benefits of business financing. In particular, the following pertains to Purchase Order Funding & Invoice Factoring. Invoice Factoring is cost effective and relatively simple. With Invoice Factoring, your company is advanced approximately 80% of the invoice amount NOW. When your client pays a factor the remaining balance of the invoice, your company receives the remaining 20% less the factoring fee.
Here is the $64,000 question: What if your company does not have the money to buy needed goods?
Here is the answer: Purchase Order Financing or a Vendor Guarantee… Purchase Order Funding is where a factor steps in and buys the needed goods or alternatively, a Letter of Credit or the use of a factor’s creditworthiness to allow your vendor to release the needed goods and be paid from the Invoice Factoring proceeds (a.k.a. Vendor Guarantee).
***Purchase Order Funding / Financing goes hand-in-hand with Invoice Factoring***
A Vendor Guarantee is inexpensive and less of a risk compared to alternative methods. A factor, experienced in this arena, contracts with the vendor to provide enough of the factoring proceeds to cover the vendor’s invoice to your company.
THANK YOU for reading…
Owner, Beneficial Brokers LLC