Purchase Order Finance and Complex Orders

In a perfect world, you would have situations where each client order, generates a corresponding order to a supplier. So you have a 1 to 1 relation. In this case, purchase order financing is fairly simple to implement.

But the world is seldom perfect.

So, what happens if in your business you collect many client orders and then combine them into a single (larger) order to you supplier. Does that mean that purchase order finance is no longer an option? Well, maybe.

Having many orders combined into a single large order complicates matters exponentially, as the purchase order finance company now has to track the delivery to each client and ensure that the clients specific order requirements are met.

Does it mean that these complex orders cannot be financed. Not really. However, these orders will need to be sizable enough to be worth the effort. And the complexity will need to be limited - usually to a maximum of 3 or 4 different clients.

Factoring financing, on the other hand, can easily be used in these types of orders, regardless of the number of clients. So invoice factoring remains an alternative.


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Looking for information on purchase order financing? Read the purchase order finance blog