One Supplier vs. Many?

Most purchase order financing providers usually finance orders where only one supplier will be needed to fulfill it. And they specifically try to avoid financing orders where there are:

1. Multiple suppliers -or worse -
2. Multiple suppliers that depend on each other (e.g. one produces product, another one the bottles for it and a third one the labels for the bottles)

Why do we avoid these transactions? Well, because of the risk. Specifically, the risk that one of the multiple suppliers will fail, preventing the complete order from being delivered and paid for.

Here is an example, let's say that you produce beverages and have an order for $100,000. You have the following suppliers that need to be paid:

1. Bottle company
2. Label supplier
3. Beverage producer and bottler

What happens if the bottle company delivers bad bottles? or if the label company does a shoddy job? We are still stuck paying the other suppliers but the order will likely fail. The customer won't take delivery and they won't pay. This is a risk we aim to avoid.

If you have multiple suppliers (for a single order) you way need to consider other business financing options, such as a business loan or invoice factoring.

---
Looking for information on purchase order financing? Read the factoring articles or the purchase order finance blog