How does Purchase Order Financing Work?

Purchase Order Financing

At SouthStar Capital, we are dedicated to structuring a financing package that benefits your company today and in the future. SouthStar can tailor fit a financing solution involving Purchase Order Financing and many of our other products.

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  1. First, you obtain a Purchase Order from a quality company that has agreed to accept your product or service.
  2. Once the Purchase Order is received, you send it over to SouthStar.
  3. SouthStar will then perform due diligence on your customer to ensure they are credit worthy and have a history of paying once the product is received. SouthStar will also confirm that the Purchase Order is valid and will be accepted once it arrives.
  4. Once the Purchase Order is verified, SouthStar will advance money to the third party manufacturer to cover the cost of the goods and labor it takes to make the products for the Purchase Order. This can be one manufacturer or a combination of manufacturers and a company that assembles the final product.
  5. Once the product is completed SouthStar will handle the shipping, customs clearance (if necessary), and final arrival of the product at a third party storage facility or your customer’s dock. After the product arrives at your customer’s dock, an invoice is sent to your customer and SouthStar.
  6. SouthStar will then employ its Accounts Receivable Financing branch and advance more on the invoice to bring the total advanced to between 70 and 90 percent of the original Purchase Order amount.
  7. Your client pays SouthStar the full amount of the invoice, then SouthStar retains a small fee and remits the balance back to your company.
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“I had a great idea with huge market potential, but I did not have any startup capital to fill Purchase Orders. I called SouthStar Capital looking for an equity investor, so I could have capital to make my product to fill the ever increasing orders. SouthStar explain that I didn’t have to give up equity in my company in order to make my product. SouthStar structured a financial solution that paid to have my product manufactured and collected the invoice. I am now able to concentrate on sales while SouthStar handles the rest!”
– Gary, CEO of a Manufacturing Company

Contact us to learn more about Purchase Order Financing and how working with SouthStar can benefit your business today and in the future!