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Get your Purchase Order finance application approved! Here are our top 5 ways!

It’s hard to believe some people want to apply without a Purchase Order!

Click below to find out exactly what you need to do!

If you would like an appointment with a Product Specialist, call the office on 1300 652 158.

Watch the video and/or read the transcript below.

Julia: Hi everyone, and welcome back to Whiteboard Wednesdays. I’m

Julia, and this is Daniel.

Daniel: Hello.

Julia: Today we’re going to be talking about one of our favourite
topics, which is purchase order finance. The other day Daniel
met with a potential client, and they asked the question, “What
can I do to get my application approved?” So here are the top
five ways to get your loan across the line. Daniel.

Daniel: Well, the first one, Julia, is have legitimate purchase orders.
It’s purchase order finance. So to back it up you need purchase
orders. Not a letter of intent, not an email from you customer
saying, “Hey, I’d like your products to be in my store at some
point in time.” But they need to have quantities, delivery
dates, and actual amounts or dollar amounts. So that’s the first
one.

The second one?

Julia: Make sure converts to debtor financing? What does that mean?

Daniel: Make sure it converts to debtor, well, the main thing about
that is when the goods get delivered and the purchase order is
fulfilled, that the invoice that is generated as a result of
that is actually financeable from a debtor finance point of
view. Some of the ways that it won’t be financeable are that the
goods are delivered on a sale or return or sale or exchange
basis, which is effectively like a consignment model. We’ll want
to know that when the goods are delivered to the customer that
they have bought them and it’s a true sale. So that’s number
two.

Julia: Excellent. Number three?

Daniel: Plenty of gross profit and know your costs. Well, having plenty
of gross profit is great. From a financier’s point of view, we
want to see that not because we want to put our pricing up, but
the reality is the more profit you have in the product that
you’re delivering, the less risk you pose the financier. So good
profit means we know that you’re motivated to get that stock
delivered and to make sure that we get paid and you get paid as
well.

Julia: Yeah. Knowing your costs, that covers quite a few things. Do
you want to just name a few in that . . .

Daniel: Yeah, I do actually. Some of the costs that some people don’t
factor in are the obvious ones, like shipping and duty. So just
make sure that in the gross profit you’ve factored in those
other costs as well.

Julia: Okay, excellent. Number four, second out, sounds like a
baseball term or something.

Daniel: What I mean by second out is that there’s a theory that
purchase orders cannot be cancelled, and the reality is that
they can be cancelled and they do get cancelled. We’ve been
caught out with them in the past. So, from a financier’s point
of view, what we’re going to want to know is if those goods are
on the boat, they’re on their way over here, and the customer
says, “I no longer want the goods,” what do we do? So we’ll want
to know that, hey, you’ve got other customers out there who will
take the goods, and we can sell them down easily without having
to go to auction or sell them down at a heavy discount. So
that’s what I mean by second out. Sometimes there’s property
involved. We prefer you just have a bunch of customers that you
could possibly sell them to in a worst case scenario.

Julia: Yes. I imagine you get into trouble with specially made T-
shirts or something in size 400 that no one else would want.

Daniel: That’s exactly right.

Julia: You took that sort of thing.

Daniel: That’s exactly what I’m talking about.

Julia: Okay. Let’s just finish up with quality control.

Daniel: The financier will want to know or we want to know that you’ve
got quality control in place, and that quality control will be
in the factory where the goods are manufactured.

Julia: So at a factory you’ve dealt with before.

Daniel: Yeah. They need to be a big factory that has very good quality
assurance, systems in place, or we’ve dealt with them before, or
we want to know that our client has somebody in the factory, or
better yet, they’re personally going to inspect the goods
themselves, and they can provide evidence to us that they have
inspected it and ticked off the quality aspect of it.

Julia: Excellent. Okay. Thanks, Daniel. If you’d like an appointment
with a product specialist or Daniel, call the office on the 1300
number. Thanks for watching.

Daniel: Thanks for watching.