Transaction
A branded distributor was in talks with large retailers and needed funding to support potential purchase orders.
Published financing features
- Authorized revolving facility able to scale with orders when received
- Preauthorized facility
Published client benefits
- Ability to take orders without fear of non-delivery
- Scalable business model
- Client negotiated a 2% supplier discount by offering swift payment
How this kind of financing works
Purchase order financing exists to cover the gap between committing to suppliers and being paid by a customer. The cost of producing or buying stock falls due immediately; payment typically arrives sixty to ninety days after delivery. Working capital sized for current volume does not stretch to an order several times larger.
What distinguishes this structure is what it is underwritten against. Rather than resting on the borrower's balance sheet history, it rests on the strength of the order and the creditworthiness of the buyer who placed it. A supplier whose own balance sheet would not support a conventional line can be financeable when the end customer is a national retailer.
A facility that is authorised in advance and scales with orders received changes the commercial conversation as well as the cash position: firm delivery dates can be quoted before the order is signed. A second effect is easy to overlook — being able to pay a supplier quickly, or on terms that suit them, has a measurable value, and that value is negotiable.
Historical example only. It is not a promise of terms, availability, or results for a future transaction.
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