Here is the typical fee structure of a purchase order facility. The fee's listed below are those you can expect to pay beyond your normal loan interest.
Initiation Fee
Most lenders will charge you a nominal initiation fee to get your purchase order finance in place. This covers any due diligence the lender has to perform.
Facility Fee
Depending on the loan structure, you may get charged a fee for the facility, along with the interest cost. This varies from lender to lender.
Early-Settlement Fee
In some cases, should the invoice against which you have taken out a facility be paid early, the lender may apply an early-settlement fee. Avoid lenders who do this if your client does pay early on occasion.
The 2 Types of PO Finance
Here are some details which will help you decide which route to take.
Supply and Deliver
You can get purchase order finance to help you with sourcing and buying finished goods that you would then directly deliver to the PO client. This is the more simple form of purchase order finance.
Manufacture
If you have an established business which already manufactures and assembles goods which you have quoted on for a purchase order, you can get finance to help you fund the costs of manufacturing and assembling.
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