How To Apply For Purchase Order Financing

You have decided to apply for purchase order financing to fund a project for your business. You require cash quickly so you can get started as soon as possible. Unlike many different forms of lending, factoring ignores your credit and analyzes your clients instead. Here are the steps that you will take as you proceed through the application process.

Determine the Worth Of Your Invoices

Before you research companies to work with, evaluate your customers. You specifically want to look at their payment history with you and what their current credit rating is. The purchase order financing organization will check this data on their own and, if they see a great deal of issues, they will decline doing business with you. If you find that many of your clients are slow to pay you and frequently bypass the due date, you may want to consider other types of lending instead of factoring. However, if you discover that your bills are rectified on time or early, then you can get the process started. 

Find a Company To Partner With

Research the different lenders that participate in purchase order financing. One thing you will want to concentrate on is the fee that they will charge you to buy your invoice. This type of lending can be far more expensive than the other options available to you. Choose an organization that has a rate that you are comfortable with. The charge will be taken from the amount paid by your client, so you will have to anticipate less being paid to you. Once you find a factoring company to partner with, reach out to them and inquire what the next step would be for your application. They will provide you with what you need and possibly assign a representative to help you.

Choosing the Invoices To Buy

Once your application is approved, the purchase order financing group will look at your invoices and choose the ones they want to buy from you. They will check the credit of your clients to determine if they want to work with them. One advantage that your customers will find as they partner with the factoring company is that their payments can be spread over 90 days instead of 30. This can be the better option if the shipment is rather large or expensive. After you send the order out from your facility, you will send a copy of the statement to the lender.