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We Provide Many Options for Purchase Order Financing in the Canadian Market
1st Commercial Credit offers a full range of receivable and purchase order financial services that will improve your company's cash flow and help you to meet all of your corporate goals.
Our comprehensive range of programs are flexible and able to be customized to your organization's specific needs. We are more than just a finance company; we are the key to your success.
Purchase order finance supplies your company with the materials you need to fill customer purchase orders when your cash flow is limited.
The Pre-Qualifications for each type of purchase order funding request will vary
Finished Goods Purchase Order Financing – Great service for Canadian based importers that need letters of credit issued to overseas suppliers. 1st Commercial Credit will pay your suppliers upon agreed terms, either by supply chain finance draft agreements or Letters of Credit.
Light Assembly Finance - This type of financing is higher risk due to the inventory arriving at the client’s place of business and having to assembly or manufacture some items to get it to a finished product. The client must have a good track record and consistent delivery performance in the past. Requires 6 months minimum of transaction history from the buyers before this is available.
Production Finance - Providing financing for production with existing clients that are already factoring receivables. Must have 2 years in business, historical sales of items, strong suppliers, profitable client in good standing. Financing includes raw materials, logistics cost, import fees and labor.
Step 1. In order for a client to be approved for purchase order financing, the business must have several conditions in order to apply.
Before any purchase order finance is considered, the business must be approved for accounts receivable financing and have the account debtors assigned with payments flowing through the invoice factoring facility. More importantly, the accounts your business plans to pledge for purchase order financing.
Invoice factoring can be a huge part of your company's success and it should be one of the key elements of your financial process. We have found that almost 70% of the purchase order financing request are usually solved with the accounts receivable financing facility. Once suppliers are paid up and the volume of sales increases, the suppliers increase the credit availability to our clients with more confidence.
Some of our clients use our Letter of Guarantee Draft Payment to Suppliers that sometimes eliminates the need for Letters of Credit with recurring suppliers. This method of trade finance is very fast, simple to understand and is very cost effective.
However, everything revolves around the accounts receivable line of credit that all these payments to suppliers are made from.
1st Commercial Credit will evaluate your performing accounts receivable, dilution rate, and any other risks that may be taken into account before exposing funds to a supplier using purchase order funds. If we feel the transaction has more risk than we want to take, additional affiliate investors may be brought in to spread the risk.
Step 2. Pre-Qualifying the Supply Chain
Suppliers and product will be evaluated to make sure suppliers are financially stable to continue on time delivery of products and raw materials. It is preferred that the products are not private labeled, and the buyers are going to continue buying these products in a recurring basis.
Supplier must accept some type of terms whereas they can collect payment once the product is at the Canadian Port. We use either Supply Chain Finance agreements where we can pay them on the invoice upon arrival at your business, customer drop ship destination or Previously accepted Letter of Credit terms.
Some Suppliers will require a deposit up-front which we will not provide, in this situation our client must come up with that portion of the transaction.
Suppliers that your company has a relationship with want to work with you and your lender. If this will be a supplier you will only use 1 time a year or not on a continuing basis, it will be sometimes more difficult to try to get them to collect once product is received in your business facility. The spot transaction suppliers are very high risk to deal with since we don't have experience with their service, product quality or packaging accuracy.
If you plan to use a purchase order funding company, you should plan ahead and get set up with invoice factoring as soon as possible, and make sure the invoice factoring company understands and is willing to work with a po funding company. Some factoring companies do not work with inter-creditor agreements or other lenders sharing the collateral and disbursing recurring payments on behalf of the client.
Contact Us Today and You Can Enjoy using our funds to grow your business in less than a week
TIP: If you plan to use a purchase order funding company, you should plan ahead and get set up with invoice factoring as soon as possible, and make sure the invoice factoring company understands and is willing to work with a po funding company. Some factoring companies do not work with inter-creditor agreements or other lenders sharing the collateral and disbursing recurring payments on behalf of the client.
Set up In 3 to 5 working days for accounts receivable financing and about 14 days for purchase order financing
Factoring receivables is much more than just advancing your business funds for the face values of your invoices. It is a reliable business line of credit that your company can utilize to meet payroll and move the organization forward. Invoice Factoring Services benefits companies that are growing faster than their cash flow, and fills in the gap that businesses struggle mostly by selling on credit terms.
Once your account is set up with invoice funding, we can simultaneously prepare the purchase order funding facility.
The thing about running a business is that it can be extremely unpredictable.
You could be rolling along at a single-digit growth rate for the first few years and then suddenly find yourself overwhelmed with orders. Your growth seems like it is a blessing, and it is. But when you check your company's cash position, you realize that this blessing comes with some conditions. You need cash to cover your orders and you are not sure what to do next. That is where 1st Commercial Credit comes in and offers solutions.
1st Commercial Credit is not a bank and we do not have the administrative red tape that slows down our approval decision like the bank borrowing process.
We can issue your suppliers payment guarantees or Letters of Credit and get you the cash you need to fill those orders and enjoy the growth that your company has earned
With a purchase order program in place from 1st Commercial Credit, you can send your sales professionals out with confidence and close those big deals
Instead of turning away larger purchase orders from repeat customers and new clients, you will be able to approve those purchases and watch as your company's revenue soars. It is the perfect financial weapon that your company needs to grow in a very competitive marketplace. You will be able to push your organization to the next level when you can accommodate the kind of growth that comes from larger purchase orders.
Think back to how your company was operating during your peak sales months last year
You knew the peak was coming based on historical data and you know that it would be a situation where you would more cash to cover consumer orders than you had on hand. It happens every year, and yet every year you find yourself scrambling with bank funding to try and meet demand. Early in the peak sales season, you may even have to turn orders away because you are still waiting on the bank to get back to you on your financing. By the time the bank gets back, you are falling behind and dealing with potentially disgruntled customers.
Since you know the peak sales part of the year is coming, it is best to get a PO funding program set up through 1st Commercial Credit and be ready for it from now on. You should never let your company finances go into chaos because you hit the busy time of the year. You should take the practical approach and put a system in place that will allow you to easily meet client demand without the chaos that normally occurs.
The longer you wait to put your purchase order finance agreement in place from 1st Commercial Credit, the less resources you will have to expand your revenue
When you do not have all of your possible financial alternatives in place, then you are not giving your company the chance it needs to maximize its opportunities. Take full advantage of the hard work you have done in the marketplace and get involved with financial resources being offered by 1st Commercial Credit today. The application process is fast and the service is the best in the financial industry. We only succeed when you succeed, which is why we work so hard to put together the financial foundation that you will be able to build on for a long time to come.