Factoring and Purchase Orders (and Supplier Financing) – Factoring is a form of financing where the lender takes ownership of specific receivable(s) and advances cash to the company. Purchase Order financing advances cash at the confirmation that a purchase order is on hand and is a much more specialized type of financing. Supplier financing is used to provide extended payables terms to a company.

Current assets, or trading assets, are amongst a company’s most liquid and financeable assets. Lenders' criteria, appetite, and pricing can vary widely, particularly between banks, non-banks, and private debt lenders. Working Capital  Lenders have their unique approach, criteria, and preferences for evaluating receivables, inventory for working capital financing. 

Common Challenges:

  • High Cost
  • Complex interest calculation
  • Advance rate and ease of access
  • Notification versus non-notification of customers
  • Purchase Orders: point of shipment, title transfer, nature of work in process
  • Supplier Financing: supplier and terms, the creditworthiness of the company 
  • End customer and terms 
  • Business performance

Solution

Structured Business Financing utilizes working capital analytics to develop financing options.

While receivables are relatively straightforward for a Factoring lender to assess, the method of calculating interest often adds complexity and makes it difficult to both understand the all-in cost of financing. Purchase order and supplier financing are specialized (and more uncommon) and are often not straight forward solutions; therefore, it is necessary to provide an in-depth presentation of the assets and payables, a complete cash conversion cycle, and drill into detail about the business as a going concern. 

We identify the likeliest financing scenario, expected pricing, and most suitable lender(s). To build a lending case, we draw on our previous experience within this financing class and drill down into the details to ensure alignment with each prospective lending solution.

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You engage us, we do a feasibility assessment and give you a go/no opinion. If we do not deliver funding - - we don’t get paid.

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