To keep your company successful, you need some flexibility in your cash flow to take care of any emergencies that arise. However, there can be times when this is an issue and you need assistance. You can use the invoices that you receive from your clients as collateral towards a loan and get the money that you require immediately. Here are the steps to obtain purchase order financing from a lender.
Determine How Much the Order Is Worth
When your customer sends a request to you to be fulfilled, estimate how much the total will be once it is completed. This should include the materials and the labor it will take to manufacture and fill the order. If you work with a wholesaler to fulfill your invoices, reach out to them to determine what your costs will be to purchase for what your client wants. Once you know that number plus the additional amount for your profit, you can contact the organization you wish to work with to get your purchase order financing. They will evaluate the paperwork and your end user’s payment history to determine if they want to buy it from you.
Sell the Invoice to the Financing Company
Once the order is fulfilled and your customer is happy, submit the invoice that you sent with it to the lender for them to follow up. If you are approved, they will provide you with the percentage of the total that you agreed upon. At this time, the third party that you are collaborating with will contact your client and work out a payment plan with them. One advantage to this arrangement is that your end-user can get terms with purchase order financing. This can be very beneficial if the final total is expensive.
Wait for the Payment from Your Client
While you wait for the final amount from the lender, you can use the cash that you have already received on essential expenses. Such as payroll or remodeling your facility. In the meantime, your third-party loan company will communicate with your client to ensure that there is prompt attention paid to the invoice. They will also follow up if payment is forgotten or late. Once everything has been satisfied with your purchase order financing, you will be sent the remainder that is owed to you minus the fee that the organization that you are contracted with will keep for their services.
Our agents are highly trained and able to discuss your business financing needs with a depth of knowledge. Contact us today and find out how we can help your business grow.