What is a Purchase Order & How Can You Get it Approved for Finance?

 In Cash Flow, Confidential Invoice Finance, Debt Collection, Debtor Finance, Distressed Mortgage, Export Factoring, Inside AR Cash Flow, International Trade Finance, Invoice Collections, Invoice Factoring, Invoice Finance, Port to Port Finance, Project Finance, Purchase Order Finance, Trade & Inventory Finance

Whether you are buying/ordering goods from a supplier or obtaining their services, a purchase order identifies exactly what has been ordered, the total amount, delivery expectations, and payment terms. 

Buyers create the PO and send them to vendors. This advises the vendor to accept the PO and send an invoice back to the buyer.

PO and the invoice usually contain similar details. The invoice generally references the PO number, along with an invoice number, to confirm that both documents contain the same information and correspond to each other. 

When to use the purchase order or when to use an invoice?

Whether you are buying/ordering goods from a supplier or obtaining their services, a purchase order identifies exactly what has been ordered, the total amount, delivery expectations, and payment terms. 

Buyers create the PO and send them to vendors. This advises the vendor to accept the PO and send an invoice back to the buyer.

PO and the invoice usually contain similar details. The invoice generally references the PO number, along with an invoice number, to confirm that both documents contain the same information and correspond to each other. 

Now, one of the greatest financial challenges for resellers can be receiving a large purchase order and not being able to fulfil it due to cashflow constraints.

AR Cash Flow can make your business runs smoothly. All you need is to get your purchase orders approved by AR Cash Flow. Here’s how:

  • Purchase order creation

Purchase order financing can help if you have legitimate purchase orders which you cannot fulfil because you lack funds. Purchase orders need to have quantities, delivery dates, and actual amounts or dollar amounts.

  • Determine if invoices are eligible for financing.

The main thing about this is when the goods get delivered and the purchase order is fulfilled, the invoice that is generated is financeable from a debtor finance point of view.

Goods delivered on a sale, returned or exchange basis won’t be financeable.

We can only finance debtors or invoices to your customers that are actual proprietary limited companies.

  • Gross profit

The more profit you have in the product that you’re delivering, the less risk you pose to the financier. Good profit means we know that you’re motivated to get that stock delivered.

  • Cost estimate

Provide cost breakdown of the purchase order including materials and/or labour.

  • Quality control should be in place

Quality control must be in the factory where the goods are manufactured. Making sure they can provide shreds of evidence that they have inspected the goods and ticked off the quality aspect.

AR Cash Flow offer purchase order financing at competitive rates and can work in most industries in Australia and overseas

Need help fulfilling large sales orders? Ask AR Cash Flow.

Daniel Dunsford
[email protected]
0432 822 949

Anthony Ferris
[email protected]
0416 347 933

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