Oxford Commercial Finance Debuts Purchase Order Financing

Oxford Commercial Finance has expanded its small and medium-sized business (SMB) working capital offerings.

The Michigan-based lender — a subsidiary of Oxford Bank — announced Thursday (Sept. 21) it would begin offering purchase order (PO) financing, in addition to its existing accounts receivable (AR) and asset-based loans (ABL).

“PO financing allows companies to pay vendors without delay and quickly fulfill new orders in hand,” Oxford Commercial Finance (OCF) President Mick Goik said in a news release.

“Our PO financing is designed to be flexible and convenient and work in tandem with our other lending vehicles such as AR financing and ABLs. This eliminates the complexity of working with several business lenders and significantly speeds up the financing process.”

According to the release, PO financing lets OCF customers “temporarily” increase their borrowing capacity via revolving credit to cover direct of costs of fulfilling purchase orders, such as the cost of goods, freight, duties, and logistics — in other words, the products, supplies, and/or fees that make sure orders are fulfilled and delivered on time.

OCF says this type of financing is crucial for manufacturers, importers, exporters, and distributors when the speed at which they are signing new orders has exceeded the company’s existing cash flow, supplier credit, and/or existing revolving lines of credit.

PYMNTS looked at the benefits of purchase order financing earlier this year in a conversation with Sandra Nolasco, CEO at Madrid-based trade finance platform Twinco Capital.

As that report noted, traditional trade financing efforts target invoice payment, accelerating the speed with which suppliers get paid, but only once they have delivered an order.

Twinco introduces a credit line at a much earlier stage of the value chain — at the point of the purchase order, instead of at the point of invoicing. This approach, said Nolasco, has a much greater impact on an SMB’s working capital and allows suppliers to take on larger orders, knowing that they have the money to purchase the raw materials.

As Nolasco reiterated, “we don’t care how big you are, we care how many orders you get.” This means that no matter the size of the order, approved suppliers get access to 60% of its value upfront so that they gain the liquidity to continue growing.

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