By Katherine It’s now. This article will discuss Canada’s purchase order finance, including how P O financing works and how to finance inventory and contracts. We’ll show you how to solve your financing problems.
As a start, it doesn’t really matter if you are second. Canadian businesses need to be aware of how your competitors use inventory and creative financing options to grow their sales and profits.
Canadian financial managers and business owners know that while you may have all the orders and contracts in this world, if you don’t have the finances to finance them properly, you are losing the battle to your competition.
Purchase order financing is becoming more popular because traditional financing through Canadian banks for purchase orders and inventory is extremely difficult to finance. Purchase order financing starts where the banks won’t lend a hand.
We need to make it clear to our clients that P O financing can be a broad concept. It could include the financing of an order or contract, inventory required to complete the contract and any receivables that are generated from that sale. It’s a comprehensive strategy.
P O finance has a unique advantage: it is creative and not like other traditional forms of financing, which are formulaic and routine.
It all boils down to sitting down with your P.O financing partner and discussing your unique needs. When we meet with clients, this type of financing is based on the needs of both the supplier and the customer. We discuss how to achieve these goals with financial guidelines and timelines that work for everyone.
A solid, non-cancellable order, a qualified customer with good creditworthiness, and precise identification of who pays whom and when are the key ingredients to a successful P O financing transaction. It’s that simple.
How does it all work? Ask our clients. We’ll keep it simple so that we can show the power of this type financing. Your company receives an order. Your supplier is paid by the P O financing company via a letter of credit or cash. The goods are then delivered to your firm and you complete the contract. The P O finance company takes title to the purchase order, inventory they have bought on your behalf and any receivables that are generated from the sale. It’s that simple. The transaction is completed when your customer pays according to the terms of the contract.
Although financing inventory can sometimes be done on a separate basis in certain cases, it is not possible to finance the entire sale cycle without the order, inventory, and receivable being collateralized.