What Is Purchase Order Financing?

Order financing refers to the company's creditworthy buyer's product order. Under the conditions of mature technology, guaranteed production capacity and effective guarantee, the bank will provide a special loan for the company to purchase materials to organize production. Loan repayment business, in logistics finance practice, is often regarded as advance payment financing. The business model-based financing model is a new type of financial business innovation that has emerged in recent years to address the difficulty of financing SMEs. ^[1]

Order financing

Right!

Order financing refers to the company's creditworthy buyer's product order. Under the conditions of mature technology, guaranteed production capacity and effective guarantee, the bank will provide a special loan for the company to purchase materials to organize production. Loan repayment business, in logistics finance practice, is often regarded as advance payment financing. The business model-based financing model is a new type of financial business innovation that has emerged in recent years to address the difficulty of financing SMEs. ^[1]

1. The company signs with the buyer

Individual banks require companies to open special rebate accounts with banks other than general settlement accounts, and require the purchaser of the enterprise to issue a commitment letter promising that the order rebate will only be credited to the account each time, which is convenient for the bank to control the rebate. The account is under control after the business is processed and before the business is settled. Generally, only money can be paid in but not paid out. Before the business is settled, if the amount of the account exceeds the amount of corporate financing, the excess can be written off. This measure Partly restricted the working capital turnover of enterprises.