Monthly Archive: January 2015

Purchase Order & Letter of Credit Financing


Many business opportunities have an affiliated challenge. For entrepreneurial companies, the business opportunities created by your sales attempts are being financed by the biggest challenge. What are your alternatives when you own a sales opportunity that’s certainly too large for your standard scale of businesses? Will your bank supply the needed funding? Is your company too new, or a startup to satisfy with the conditions of the bank? Can you tap into a home equity loan or a commercial real estate loan in adequate time to conclude the trade? Do you refuse the order? Luckily there’s an alternate method to fulfill this challenge: You may use Purchase Order Funding & Letter of Credit funding close the deal and to deliver the merchandise.

What’s purchase order funding?

Purchase order funding is a specialized way of supplying loans that are secured by accounts receivables, inventory, machinery, equipment or real estate and organized working capital. Such a capital is superb for startup companies, refinancing existing loans, financing growth, mergers and acquisitions, management buyouts and management buy ins.

Purchase order funding is based upon bona fide purchase orders from government entities, creditworthy businesses, or reputable. Confirmation of the legality of the purchase orders is needed. The funding isn’t based on the fiscal strength of your company’s. It’s founded on the creditworthiness of your customers, the strength of the commercial finance company financing the trade, and in the majority of instances a letter of credit.

What’s a letter of credit?

A letter of credit is a letter from a bank guaranteeing that a purchaser’s payment to a seller will be received punctually and for the right sum. In the event the purchaser is not able to make payment for the purchase, the bank is expected to cover the total quantity purchase. To be able to issue the letter of credit in a purchase order funding trade, the bank relies on the creditworthiness of the commercial finance company. The letter of credit “backs up” the purchase order funding to the provider, or manufacturer.

Is purchase order funding plan that is suitable for your sales?

The paradigm that is perfect is a provider sending directly to the purchaser and purchasing products from a provider. Importers of finished goods, exporters of finished goods, outsource manufacturing companies, wholesalers and vendors can efficiently use purchase order funding to grow their companies.

Read also Customer Finance Programs Key to Increasing Sales