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Purchase Order Financing: for Start-ups and Established Businesses
by: Donna Poisl
If you are a new business and you get a request for a huge order, it's exciting, isn't it? You start mentally adding up all the money you will make, all the supplies you can buy, all the business you can get after that.

Then when you talk to the manufacturer of the product, and discover they need partial payment before shipping, perhaps even some when you place the order and the rest on delivery, you realize you'll have to refuse the order. Since you are a new business, you don't have the credit history that will allow you to have payment terms and you don't have a bank line of credit.

If you are an established business and you get a huge order, you also might have to refuse it. You might not have a good credit history or might not have a large enough line of credit with your bank.

There is a solution, called Purchase Order Financing. If your customer is established and has good credit, you can get a Letter of Credit or an advance of funds on the purchase order. This advance will pay for the raw materials, parts, finished goods, packaging, shipping, inspections, etc.

This is especially important for wholesalers, distributors, importers and exporters and is suitable for many different types of consumer goods.

Obviously, if your company management has a history in the industry, it will help the investor feel more comfortable with your company. Your supplier has to have a good record of producing the goods and delivering on time, too.

P.O. Financing pays for the actual costs of filling the order, it doesn't give you any extra money, it is not for operating costs, etc., so it might be 40%-70% of the invoice amount (depending on your profit margin). The P.O. financier usually has to be paid when the product is delivered to your customer. There is a small fee for this service, it varies with each job and the time frame involved, but is usually 1%-5%.

Once the product is delivered to your customer and you issue an invoice, you will want to factor that invoice so the P.O. financier is paid back by the factoring company. Since factoring gives you around 80%-90% advance, the supplier will be paid in full and you will get the rest of the advance. Then when the bill is paid, you'll get the rest of it minus a small fee of 1%-5%.

When you work with a good broker, that broker will find the best P.O. financier for you and then get you set up with the best factor so everything will flow smoothly for you. This will allow you to grow your business, accept more orders, build up a good reputation with suppliers, customers and banks, and fill all your dreams of being a business owner.

You will eventually get to the point where you will be able to keep your business growing by using a factor for all or most of your invoices and will be able to fill all small and medium size orders with the capital you have. You will probably need P.O. financing only when you get another huge order.

The last thing you want to think of when you get a call for a big order is that you can't accept it.

About the author:
Donna Poisl is President of Creative Funding Solutions. CFS works closely with several of the best factors and P.O. financiers in the country, each with different rates, fees and requirements and is able to find the best one for each client. Contact Donna at http://www.solvecashflowproblems-factoring.com


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How to Find the Best Low APR Credit Cards
 by: Morgan Hamilton

Low APR credit cards are much more prevalent than in years past. Competition is stiff and credit card financial institutions offer many nice perks, rewards, points, low annual percentage rates (APR) and other inducements. They want to capture new customers who've never had a credit card but also those who already have a credit card and might like to save money by transferring that card's balance on to their new low APR credit cards.

Of course, there is nothing lower in an APR than zero - and those exist too, although sometimes for a limited time period. It may be that the lowest, or even the zero percentage APR is for an introductory period, after which the rate is higher. The permanent APR is what you want to watch out for, of course. Although if you're not opposed to doing a lot of switching, you can always purchase a low APR credit card, or zero percentage APR credit card, transfer the balance from your current high APR credit card, and then, once the introductory time period has expired and the APR is about to go up on your newest credit card, transfer the balance yet again to a brand new low APR credit card.

Let's look at a few of the low APR credit cards out there, so you know what kinds of options are typically available to you.

Citibank, for example, offers low APR credit cards that give you five percent cash back on any purchase you making at grocery stores and gas stations with your low APR credit card, and one percent back for any purchase elsewhere. The APR on transfers is zero for the first year. If your transfer transaction is at least $1500 you will earn $5 cash back with the low APR credit card. There is no annual fee and the APR after the first year is 12.24 percent.

Discover has a platinum clear card whose low APR is continual. The first year the APR is zero, but after the first year it's still a very competitive 9.99 percent. And there is no annual fee. With these low APR credit cards you earn a five percent cash back bonus on purchases made from hardware and home improvement retailers, restaurants, book vendors, and gas stations. If the retailer doesn't qualify you for the five percent discount you will always get one percent back no matter what you buy and from where with this low APR credit card.

Chase Bank offers low APR credit cards as well. Its zero percent APR is good for six months, after which you will pay 10.49 percent. These low APR credit cards have no annual fee, and offer rewards at the rate of one point for every dollar spent with your Chase card. You can get free airline flights and hotel rooms, as well as cruises and auto rentals. This card also provides $500,000 worth of travel insurance for worldwide vacationing. You can also take advantage of a fifteen percent discount off a Hertz car rental with these low APR credit cards.


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