Purchase Order Financing is used to pay your
suppliers, laborers, or other intermediaries for goods or services to
generate additional sales. A company will need purchase order financing
You need expertise to handle the financing
You need additional working capital
You need a quick response to an immediate sales need
You don’t want to incur additional credit risk, be it foreign
You want your buyers and sellers to not know each other
You want the opportunity to make additional profit
J&D Financial understands all the above
reasons and will work with you to fulfill your needs.
They finance purchase orders for all types of transactions that include:
U.S. Supplier to U.S. Buyer
U.S. Supplier to Foreign Buyer
Foreign Supplier to U.S. Buyer
Foreign Supplier to Foreign Buyer
Every purchase order transaction stands
on its own. They look at your business history, the credit worthiness
of the buyer, the ability of your supplier to produce the goods, and
if the transaction is profitable for all parties.
funding those organizations with a track record of producing goods.
Your company may be young or a start-up, but your company management
must have a proven track record to produce the goods.
Buyers Purchase Order
firm must be reputable with a good credit line. The purchase order must
must know your product and be able to produce it in time and to meet
your buyer’s terms. The supplier must be a firm with a good business
history and track record of producing goods.
after all expenses must make a profit for all parties. Payment of the
money lent to support the transaction can come from any number of sources
such as factored receivables.
Purchase Order Financing is available only to qualified customers. P.O.
Financing falls into two types:
Finished Goods refers
to transactions where the goods are never touched by you. Usually these
goods go directly from your supplier to your buyer. You never take direct
Non-Finished Goods are when you the seller take possession of the goods
either in a raw state (such as yarn to make blue jeans) or a semi finished
state (partially sewn blue jeans). In either case you must take possession
of the product.
Finished Goods are easier to finance than Non-Finished Goods.
J&D Financial will need to assess your ability to complete the transaction
in processing the goods for the final shipment to your buyer. J&D
Financial Corporation finances both Finished and Non-Finished purchase
In order to consider P.O. Financing for your firm they will need:
- Completed P.O. Application Form
- Your invoice to buyer
- Your supplier’s invoice
- Your purchase order to your supplier
- Profit on transaction - gross margins >18% - see work sheet
- Business History
- P&L (most recent)
- Balance Sheet (most recent)
- Time frame to produce goods
- Credit information on your buyer
- Supplier Information
- Finished Goods or Non-Finished Goods.
Generally they charge
5% (sometimes more, sometimes less) one time fee for purchase order
financing on the gross amount to be paid by the buyer. Sometimes there
may be an additional interest charge on the money advanced if the purchase
order takes greater than 30 days to complete. Every purchase order pricing
is individual and unique. This purchase order fee does not include the
factoring fee which may cost an additional 3% to 6% if you are factoring
the receivable. (Want to know more about Factoring Fees?
J&D will consider financing a purchase order transaction to be paid
out by another factor or lender. In order to see if the transaction
will make money for both parties, please fill out the worksheet section
of the application form. As you can see the total cost of purchase order
financing fee and factoring fee can range from 8 to 11%. Since both
parties need to make money, the gross margin should be greater than
You are an apparel manufacturer. You have been in business for 5 years
and have a good Profit and Loss Statement and Balance Sheet. You just
received a large order and are maxed out on credit from your suppliers.
Your sales price to your buyer is $100,000 and your total cost to produce
the goods is $75,000. Your gross margin is 25%. J&D will purchase
the goods for you from your supplier, give you 45 days to produce the
goods, charge you a 5% purchase order fee ($5000, 5% of $100,000) and
factor your receivables.
You are importing Silk Loungewear from China. You do not need to touch
the goods, they will be shipped directly to the buyer, a large U.S.
retailer. The cost of the goods is $500,000 and you will sell them to
the buyer for $700,000. Gross margins are 20% (after all importing costs).
J & D opens a Letter of Credit to your supplier and will factor
the receivables. When the goods are shipped your Chinese supplier will
get paid. When the goods are landed in the U.S. and shipped to the U.S.
buyer, J&D will factor the receivable and pay the purchase order
from the funds advanced.