1st Capital's Purchase Order Financing program is a unique source of funding for your company
Traditional lenders, finance companies, and banks limit their lending based on your existing company assets (such as accounts receivable, equipment, and inventory). 1st Capital's Purchase Order Financing program creates the asset, by advancing funds directly to your vendor for the purchase of inventory that can be used to fill your backlog of sales orders. How many times have you wondered, "If I only had the money to fill this
order or take on that project, I could really launch my business?" Through the judicious use of Purchase Order Financing, 1st Capital Corp can make that wish become a reality. Ponder for a moment how your business could benefit from PO Financing and Accounts Receivable Factoring.

1st Capital's Purchase Order Financing and Accounts Receivable Factoring programs look beyond the financial strength of your balance sheet and focus on the strength of your customers and your ability to produce or provide a quality product. Purchase Order Financing is almost like having a silent equity partner without giving up ownership of the business. If you have been considering selling part of your business for additional working capital, think again. The most expensive funding a business can face is the infusion of equity money. Equity partners never go away. They remain an expense and burden to the company forever. The cash infusion they bring to the business will quickly disappear into the current working capital needs of the business. Soon your company will be in the same situation you are in today; short of working capital to fill new orders and to fund the continued growth of the company.

At first glance, Purchase Order Financing appears more expensive than other forms of traditional funding. PO financing is a transactional expense associated with specific sales orders that can be used in times of need. The more relevant question is, "What is the cost of NOT FILLING A SALES ORDER due to lack of funding?" If the additional transactional expense of PO financing will result in a profitable sale, the cost is irrelevant because the company will receive additional revenue and profit it would not have otherwise experienced. Often, the expenses of PO financing can be offset by taking advantage of discounts offered by your vendors for prompt payment or paying on COD terms. How much business have you not pursued or worse, have had to turn away due to lack of working capital to fill the orders?
Below is a simple example of a subcontractor requiring PO financing to complete a project. This example would be the same for any manufacturer, or service provider in need of working capital to complete a contract or PO. The contractor has a PO for $330,000 that is to be completed in 5 weeks. The contractor is in need of material, payroll and requires rented equipment to complete the contract on time. His vendors require him to pay in advance or on COD terms, however the company cannot invoice and will not be paid until the contract is completed in week 5. Without PO financing the company cannot fulfill the profitable contract.

As required by 1st Capital, the contractor has listed his cash needs by week and has identified the vendors that must be paid during that week. He has also listed the mile-stones or what his company will accomplish that same week to help 1st Capital identify and monitor that contract. 1st Capital will fund the cash needs of the business including payroll as long as the business is meeting the required milestones.

PO financing can include posting letters of credit to your vendors, prepaying vendors for product or service, and issuing payment guarantees (vendor assurance guarantees). Call us today and learn more about Purchase Order Financing.
Order Product From: Week 1 Week 2 Week 3 Week 4 Week 5
Newco Steel 75,000
A-1 Glass and Glazing 30,000
Ace Hardware 25,000 10,000 5,000
Labor (payroll) 25,000 35,000
Equipment Rental:
40" crane 10,000
Fork lift 5,000 5,000
Sub Contractors 3,000 6,000 15,000 7,000
Misc. 4,000 3,000
Weekly Cash Needs: $112,000 $71,000 $35,000 $45,000
Invoice for shipment $330,000
Summary:
   Contract amount...................................................$330,000
     Expenses..............................$263,000
     P.O. Financing Exp................$15,000
Total Exp..................................................................$278,000
   Profit on the Job....................................................$  52,000
Weekly Milestone
Week 1: Product delivered and machining started.
Week 2: Machining complete. Outsource to vendor for glazing.
Week 3: Glazing complete. Quality control 50% complete...etc.
What information is required by 1st Capital for PO financing?
  • Complete 1st Capital's Application
  • Copy of pro forma invoice to your customer
  • Your PO(s) to your vendors/suppliers for product to fill order
  • Any credit info or past history you have with your customer
  • Time sheet to fill order
  • Break down of revenue and expenses to fill order
  • Company P & L Balance Sheet (most recent)
  • If funding for the purchase of finished goods or raw material
  • If you're currently financing or factoring your Accounts Receivable
  • If there are any tax liens on the business
Criteria
  • Client product must be re-saleable (must have multiple buyers).
  • Client customer must be credit worthy
  • Total cost of client to complete the order must not exceed 75% of the value of the PO.
  • 1st Capital will send payment directly to your vendors for the purchase products.
  • Fulfilling the PO must not exceed 60 days.
  • Product must be established and proven in the market place for at least 6 months.
1st Captial's PO Funding programs include:
  • Flexible terms
  • PO Financing advances range between $10,000 and $500,000
  • PO advances can be as high as 75% of the PO or sales order
  • Fees depend on complexity of transaction. Typically between 5-7% of the PO amount
  • Working with your current factor
  • Provide trade financing (letters of credit to your vendors)
  • Following delivery of the product to your customer, the PO rate reduces to a lower factoring rate
  • Is a personal guarantee required? Yes
  • Will a UCC filing be recorded by 1st Capital? Yes
Application Requirements
  • Complete our application with all supporting documentation.
  • Three customer references from customers that are currently or previously purchasing the same or similar product.
  • List of all suppliers that will be used to complete the order.
  • Provide product brochures or marketing information.
  • Provide a spread sheet and time line showing the cash needs and vendors to be paid weekly.
  • List of shipping dates and invoice amounts being billed.