Purchase Order Finance: What’s required of you?

Posted June 8, 2011

In Purchase Order Finance, Trade & Inventory Finance

So you are considering Purchase Order Finance. You have a solid Purchase Order from a quality customer and an idea on who you want to manufacture the goods.

But what else do you need? What exactly is expected of you to complete this transaction?

I think the best way to put it is – before you enter into a discussion about acquiring Purchase Order finance you really need to have your affairs in order, in fact you will need to do some detailed research into different elements of the deal and make sure you are accountable for every stage along the way.

So what’s the first thing?

Before you embark on an overseas exchange and agreement, do you have experience in this type of thing? You will need to demonstrate a strong background in dealing with overseas suppliers and mass producing product.

Following this, you need to provide a clear, genuine and detailed Purchase order – information such as quantity, date and price must be stated clearly on the PO.

Along with your PO, you must include a Supplier Agreement, this is the terms on which bind you and the customer to the order.

Now the next thing you need is extremely important and vital to the success of your exchange. You must identify who your manufacturer is but further to that you must make sure they will pass a background check, passing ethical, building and production codes. To find out about all this you will need to conduct a factory review. If the manufacturer passes then we are happy to work with them.

Also, another element that needs to be considered when working with an overseas supplier- Is what kind of QC processes are put in place to make sure that what your customer ordered and the end result are the same thing, have you allowed enough time for it to be produced?

And finally do you have enough profit margin from this exchange to fuel your business? We recommend more than 30%.

Once you have all these things sorted out the process of Purchase order finance is quite simple and easy to use.

For more information or to organise an appointment with a Product Specialist, call 1300 652 158

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Daniel Dunsford