How does Purchase Order Finance work?

Don’t have your long term plans forced back by your short terms finance needs. One of the fastest, easiest and most effective ways to obtain working capital is through purchase order finance. POF can also generate the fastest growth in sales, profits, exports and employment for your business.

Purchase order finance is easier to qualify for than many other types of financing since it is very short term and the collateral to secure the loan can be in the form of the purchase order itself: inventory, receivables, personal guarantees, bills of exchange, etc. Real estate or other hard assets are rarely required as security.

Here’s how it works:

  1. You receive a purchase order from your customer
  2. AR Trade Finance then verifies with your customer the validity of the purchase order
  3. We open a Letter of Credit to your customer
  4. Your supplier then ships or delivers the completed goods to your customer
  5. Your customer then pays for the goods either by COD or on terms
  6. AR Trade Finance then pays you the profit minus the financing costs

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