CapFlow Purchase Order Finance
All small to mid-size business are different. And all liquidity needs are different. In some cases, our clients might have customer order and need capital to manufacture or produce the order. For these scenarios, CapFlow Funding can help by providing purchase order financing.
CapFlow's purchase order financing is similar to our factoring facilities except the funding is used to finance prospective activities in your value chain such as manufacturing and shipping. Purchase order financing finances obligations between the client and their supplier or manufacturer, not the client and their buyer.
Every purchase order financing transaction requires three parties:
- Seller/Distributor – Our client
- Buyer – Will purchase our client's product via a verified purchase order
- Manufacturer – Will make and deliver the product to client for later re-sale
A traditional purchase order finance transaction has the following components:
- Buyer agrees to purchase product from Client. No products have been delivered.
- Manufacturer will make the product, but requires payment up-front or a letter of credit.
- Client presents CapFlow a verified purchase order from Buyer.
- CapFlow completes credit due diligence and funds the manufacturing of the product.
- Manufacturer delivers product to Client.
- Client delivers product to Buyer.