Purchase Order Financing is a financial lending facility that allows companies to access funds in the short term, service their clients and grow their business.
It is an ideal lending facility based on guaranteed purchase orders, project based or procurement business.
If your business requires funding to supply goods or services upfront to your client, purchase order funding will enable your business to fulfill the order without the stress of acquiring additional working capital for the business.
The short term finance is normally over and above tour regular banking finance, credit, loans or overdrafts, which increases your business’ financial flexibility to be able to purchase stock to fulfill your orders.
AFS structures each deal according to the clients cash flow cycle to ensure your business is not under additional pressure while the orders are being fulfilled.
How it Works
What it Costs
- Upfront Working Capital
- Advantages of Larger Orders
- Supplier Discounts for Upfront/Prompt payment
- No Supplier Credit
- Increased Sales
- Funding for Seasonal purchase requirements
A Purchase Order Finance application is completed and submitted to AFS, together with the Purchase Order from your client and relevant supporting financial information
- A detailed project finance plan is submitted for the duration of funding required (I.e. from first supplier payment to when the client will pay you based on your terms with the client) and gross profit on the deal
- AFS will then apply for insurance cover on your company
- Once insurance approved AFS provides a quotation on the funding detailing the terms and conditions (i.e. 30, 60, 90 days from statement; whether cession of Purchase Order may be applicable; suretyship)
- Once Quotation accepted, your supplier will invoice AFS directly for the cost of the goods to be supplied
- Based on this invoice from supplier, AFS will then invoice you and you invoice accepted
- Once accepted, AFS makes payment directly to the supplier
- Either you pay or your client pays AFS on due date, depending on terms of the purchase order finance
- Each client is evaluated on a case by case basis and the costs are calculated on a % of GP and security.