Liquid Capital of Arizona is part of an international finance company. President Joel Gottesman explains that Liquid Capital provides alternative finance for small- and mid-sized businesses, helping to fund business growth. Purchase order finance, a rather unique service, can help a smaller company that has created a new product for which it is receiving many orders, perhaps from large retailers like Costco or Walmart.
The problem a business in this position may have is figuring out how to fund the manufacture of the product to meet the demand. The solution, Gottesman says, is purchase order finance. Liquid Capital provides a letter of credit to the manufacturer based on Liquid Capital’s credit. That way, the manufacturer knows it will be paid when the product is manufactured and shipped by simply drawing down on the letter of credit.
There are two main requirements for the use of the purchase order finance solution. For one thing, says Gottesman, the product has to be presold. There has to be a purchase order from a large retailer. The second condition is that “you have to have the product manufactured by a third party.” Purchase order financing doesn’t work for a company that makes its own products.
“If you have a client or know of a business that has large purchase orders and is looking for a working capital solution, purchase order finance may be the answer” Gottesman would welcome a call and an opportunity to look at the situation.