We will explain Purchase Order financing below.
If you, as a company, see opportunities to grow but have too few resources to finance procurement, procurement financing may be an option. With purchase order financing, it is possible that a small amount or the entire purchase amount can be financed. The purchase order financing always changes into stock or debtor financing, also known as factoring. This ensures that the entire process from purchase to sale is covered. In addition, purchase order financing is already available for companies with a revenue of at least 1 million euros.
Factoring is very important in debtor management. Factoring is a form of financing in which outstanding invoices are immediately paid by the factoring company. This ensures that you as a company have more financial room and can therefore use your capital to invest.
Factoring offers credit management, collection in the event of non-payment and direct payment of the realized turnover. An extension of factoring is purchase order financing.
There are several conditions that purchase order financing must meet: purchasing largely takes place entirely based on closed orders, the operation must be reliable and the orders transferable, purchase order financing takes place together with pledging of the stock and the order.
Purchase order financing goes through a circle from purchase to sale through several steps:
Step 1 is the purchase of goods
Step 2 is the money owed
Step 3 is waiting for the final customer
Step 4 is to sell to the final customer
Step 5 is the payment of the customer
When you, as a company, make use of financing, several advantages will arise for your company, such as:
– Covering the risk of default by credit insurance;
– Being able to immediately pay creditors for a discount on the purchase;
– More financial space;
– Possibility for more purchases and margin advantage realized;
– Good liquidity that market parties are more likely to seek out.
When you take out credit insurance, the financing, including purchase financing, will expand. Banks are more likely to provide credit if the non-payment is removed. This is because the risk is mitigated. The duration of the debtor will also lose the invoices paid by the professional collection. Because the outstanding invoices are paid, the financial flow can be refined. This will increase the liquidity advantage. At the Credit Insurers we analyze your company characteristics, look at your wishes and find a credit insurance that is completely suitable for your company. Contact the Credit Insurers and avoid unnecessary risk.
Purchase order financing in combination with credit insurance? The Credit Insurers can help you! The Credit Insurers guide you in a transparent and fair manner to a credit insurance that has been with your company. Contact us for a completely free and non-obligatory consult. You will receive a quote within 24 hours, we will compare the options together and, if interested, we will choose a credit insurance policy that suits you and your company! We can be reached by e-mail: email@example.com, by telephone: +31 85 301 2230 and via the contact form.