When the manufactured product that is the subject of PO Funding is delivered to the ultimate buyer, the Invoice that is generated will be subjected to Factoring. The PO financing charges will be deducted at this point.
If the sale is COD, the ultimate buyer will pay the PO funder, who will first deduct the PO Funding fees, before remitting the balance to the company.
PO Funding is more expensive than Factoring. Companies are advised to consider it after they have factored, or borrowed on their Receivables and still require additional funding to complete existing Purchase Orders.
Cashwerks www.cashwerks.com is a Commercial Finance Consultancy providing intelligent capital solutions to start ups and mid-sized companies.
© 2006 Sanjeev Aaron Williams & Cashwerks All Rights Reserved
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