Glossary of Business Credit Terms

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Purchase Order Loan

What is Purchase Order Loan?

To get a large purchase order can be quite challenging for resellers, wholesalers or distributors, especially if they don't have enough funds to meet the ends. Purchase Order Loan is a financing tool that is specifically designed to assist resellers and distributors to fulfill their large purchase orders. This strategy provides the financing you need to pay the suppliers, thus allow you to deliver the goods and fulfill your orders on time.

Purchase Order loan is a funding solution rather than a loan. It is suitable for businesses that don't have enough funds or cash flow to fulfill the orders and keep customers happy.

How Does Purchase Order Loan Work?

Being a reseller, you can easily obtain purchase order funding. All you need to do is apply to purchase order financing company directly. In case you get approval, they will pay your suppliers to manufacture and supply the order to customers. The customer will give payment for the service directly to suppliers. Next, supplier will take away their fees and will pay you the remaining amount.

Wondering how Purchase order financing companies make money? Well, they demand a little percentage of the amount that they paid in advance to the suppliers. In return for getting the upfront payment to your supplier, you are bound to pay this fee to the lender.

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