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Bankers Factoring

an Employee-Owned Accounts Receivable Factoring Company

Employee-Owned A/R Factoring Company

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Bankers Factoring

Home Purchase Order Funding & Trade Financing

Purchase Order Funding & Trade Financing

What is PO Funding & Trade Financing?

How is Bankers Purchase Order Financing different than Invoice Factoring?

Can a Bankers Vendor Guarantee or Bankers Trade Financing Help Your Business Grow?

What is Purchase Order & Trade Import Financing?

What are Purchase Order Funding and Trade Financing?

Table of contents

What is Purchase Order Factoring?

Purchase order financing to improve cash flow.

Invoice Factoring Example: Selling pet toys to Walmart is your big business. You ship the toys, and Walmart loves them but pays you 90(!) days later. You can’t wait 90 days for your money (no monies for more products, payroll, rent, marketing, food), so you sell your Walmart invoices to Bankers Factoring on an ongoing basis. This is an example of Invoice Factoring.

Please read, is a purchase order a legal document?

Purchase Order Financing or PO Funding Example:

Here is a purchase order financing example, Dollar General gives you a big purchase order for pet toys. Still, you don’t have enough money even to fulfill the order and buy the product from your Chinese or Vietnamese manufacturer. Bankers Factoring buys the toys for you or uses our credit to arrange terms with your supplier. Since you plan to factor the subsequently created invoice with Bankers Factoring, we are happy to offer you purchase order financing. That is an example of Purchase Order (PO) Funding or Bankers Trade Import Financing with Invoice Factoring to improve cash flow.

We have also special Bass Pro Shop funding programs.

Can You Factor a PO?

The main difference is when each is utilized in the process. Invoice factoring is used after a business sells goods or services. PO financing, available only to businesses that sell physical goods, is used before you can generate a factorable invoice. Bankers Factoring has a Purchase Order Financing Analysis spreadsheet to analyze your deal to make sure it makes sense.

You can also read about Bankers Factoring’s trade financing programs.

Invoice factoring vs PO financing

At Bankers Factoring, we offer both invoice factoring and purchase order financing to help businesses manage cash flow and seize growth opportunities, but they serve distinct purposes. Invoice factoring provides immediate cash by purchasing your outstanding B2B or B2G invoices, allowing you to bridge the gap between delivering goods or services and receiving payment—perfect for businesses like trucking or staffing that face delayed payments that needed improved cash flow.

Purchase order financing, on the other hand, funds the upfront costs of fulfilling customer orders by paying your suppliers directly, ideal for manufacturers or importers needing capital to produce or procure goods before invoicing. While invoice factoring turns unpaid invoices into same-day cash, purchase order financing empowers you to take on larger orders you couldn’t otherwise afford, making them complementary tools for sustainable business growth.

PO funding rates can run from 1-3% per 30 days, with prorated pricing thereafter. Pricing is based on the monies advanced or the funds used to buy finished product for you. A Vendor Guarantee is cheaper than using Cash Against Documents.

What does PO Funding Cost?

Who Uses Bankers Purchase Order Financing?

The types of businesses that use PO financing include:

  • Distributors
  • Outsourcers
  • Resellers
  • Importers
  • Jobbers
  • Wholesalers
  • Businesses with heavily seasonal sales patterns
  • Businesses that need fast money versus business loans
  • Businesses with tight cash flow and a need to purchase finished goods before fulfilling orders

To qualify for Purchase Order Funding, you:

  • Sell to credit-worthy B2B or B2G Customers with solid accounts receivable
  • Your minimum gross profit must be at least 20% profit margin
  • Have experience with similar products and comparable clients
  • Transactions per month of no less than $50,000
  • Provide qualified purchase orders or letters of credit from your customers
  • Payments from your customers come to Bankers Factoring
  • You do not qualify for traditional bank loans because of time in business or credit score

More Details about PO Funding and the Use of a Bankers Vendor Guarantee

A Vendor Guarantee is where you need Bankers Factoring to buy the goods for you (using Cash against Documents (CAD) or via a Letter of Credit), or you need to use Bankers Factoring’s credit worthiness for your vendor to release the goods and be paid back from the Factoring proceeds.

In addition, read our article on what is trade financing for small businesses.

Vendor Guarantees are the cheapest form of PO Funding because it is less risky for you and Bankers Factoring company. Bankers Factoring contracts with your vendor to pass enough of the factoring proceeds on to them to cover the vendor’s invoice to you. Thus, it costs just .5-1.5% of the cost of goods, not the invoice amount like factoring.

Note: As a Business Owner, your goal should be to get your vendor(s) comfortable enough with you to take a Vendor Guarantee, as your costs will reduce significantly and much closer to a bank’s purchase order loan.

More about Cash Against Documents (Doc)

Cash Against Documents can be FOB China or FOB US. Of course, FOB China is at higher risk than FOB US, and the money is out longer. Cash Against Doc’s cost can be 2.5% FOB US to 4% FOB China. There is also the real risk of your vendor not meeting quality, quantity, and timeliness issues. In addition, unlike Invoice Factoring, PO Funding has the risk of product rejection by the account debtor (your customer).

Even though some of your customers will pay quicker and very few before receiving the goods, you still need Bankers Factoring to buy the goods for your account debtor’s (your customer’s) approval. This is much riskier and more costly than just factoring. However, it is based on what we must pay your vendor, not the invoice amount. Also, the higher your deposit to the vendor, the less the total fee.

Also, read our Guide to Purchase Order Financing to improve cash flow.

Import Trade Financing for goods coming into the US and Purchase Order Funding for goods being bought and sold in the US are unique business financing options for bankers factoring clients. They give you unlimited working capital and the means to grow your business safely and correctly. It can almost be impossible to get a bank loan against a purchase order for a start-up or young company. We are start-up friendly.

We can also look at international trade & import and export financing to S&P 500 creditworthy customers’ orders.

Looking for trustworthy PO funding companies? Look no further than Bankers Factoring company for invoice financing plus purchase order financing for great B2B or B2G financing options.

Why Bankers as your trade and purchase order financing company? They were a lifesaver when they funded both the purchase orders and our invoices. Thank you Bankers Factoring.

Sammy S, Importer of Specialty Bearings

Why Bankers Factoring | Invoice Factoring vs AR Line of Credit | Recourse vs Non-Recourse Factoring

Ready for Bankers Factoring to fund your entrepreneurial dreams with PO Funding? Call 866-598-4295 or go to the Bankers-Factoring-Application.

(866) 598-4295

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