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<title>Asset Enhancement Solutions</title>
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<td><img src="http://assetenhancement.com/images/FENG-Sponsor-042214.gif" width="700"alt="Asset Enhancement Solutions" style="width:700px;"></td>
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<tr><td><img style="width:700px;" src="http://assetenhancement.com/images/logo-2020-dark.jpg" alt="Asset Enhancement Solutions" width="700"></td></tr>
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<td><h1 style="text-align:left;font-size:24px; color:#346633; font-weight:700;margin-bottom:0px;margin-top:40px;">What is Purchase Order Financing & How Can It Help a Business?</h1>
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<td><p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:100%;margin-bottom:20px; margin-top:0px;">Purchase Order (PO) Financing is short-term funding used by a borrower to finance the fulfillment of a purchase order from a credit worthy customer. A Purchase Order Finance Company can fund up to 100% of product cost plus freight and customs duties. During these challenging economic times, there has been a significant increase in demand for PO financing. </p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:100%;margin-bottom:20px; margin-top:0px;">PO financing is an ideal option for resellers of hard goods that lack the funds to pay their manufacturers or distributors. PO financing can provide virtually unlimited growth capital for businesses because it relies largely on the credit quality of the company issuing the purchase order. </p>
<h1 style="text-align:left;font-size:24px; color:#346633; font-weight:700;margin-bottom:0px;margin-top:40px;">The Steps of PO Financing: </h1>
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<li>Seller (prospective borrower) receives a purchase order from a credit worthy customer.</li>
<li>Seller submits PO and cost breakdown to PO Finance Company (Lender) for review and due diligence.</li>
<li>PO Finance Company ascertains that once the goods are shipped to the credit worthy customer, an "Other" lender (bank, asset-based lender or factor) will finance the accounts receivable that is created.</li>
<li>PO Finance Company issues a letter of credit to supplier or advances cash to supplier.</li>
<li>Goods are shipped to the credit worthy customer.</li>
<li>Seller invoices customer and creates an accounts receivable.</li>
<li>The "Other" lender pays-off the PO Finance Company for the funds it advanced to suppliers and for its financing fees.</li>
<li>Seller now has financing from the "Other" lender that is now collateralized by accounts receivable.</li>
<li>If the accounts receivable advance from the "Other" lender exceeds the amount paid to the PO Finance Company, Seller will receive the balance from the "Other" lender.</li>
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<h1 style="text-align:left;font-size:24px; color:#346633; font-weight:700;margin-bottom:0px;margin-top:40px;">An Example of PO Financing in Action:</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:100%;margin-bottom:20px; margin-top:0px;">Surge Technologies, Inc. a start-up technology company, receives a purchase order for $1,000,000 from Staples for 200,000 surge protectors. Surge Technologies, Inc. sources the surge protectors from overseas for $500,000 but cannot obtain credit from its supplier. The supplier is willing to accept a letter of credit or cash in advance. The cost of ocean freight is $50,000 and custom duties and fees are estimated at $80,000.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:100%;margin-bottom:20px;">Surge Technologies, Inc. utilizes a financial advisory firm such as Asset Enhancement Solutions, LLC ("AES") to arrange Purchase Order Financing for this transaction. The PO Finance Company will issue the supplier a letter of credit or wire funds once the product clears customs.</p>
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<li> The PO Finance Company wires the supplier $500,000 when the goods clear customs.
<li> The PO Finance Company wires the Customs Broker $130,000 for the cost of freight and duties.
<li> The goods are delivered to Staples and Surge Technologies, Inc. invoices Staples for $1,000,000.
<li> AES has arranged for an "Other" Lender (Asset-Based Lender or Factor) to advance funds against accounts receivable at an advance rate of 85%.
<li> The "Other" Lender advances $850,000 ($1,000,000 x 85%) as follows:</ul>
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<tr> <td>Total advance from "Other Lender" </td> <td align="right">$850,00</td> </tr>
<tr> <td>Repayment to PO Finance Company</td> <td></td> </tr>
<tr> <td>• Cost of goods to supplier in China</td> <td align="right">$500,000</td> </tr>
<tr> <td>• Cost of ocean freight and duties</td> <td align="right">$130,000</td> </tr>
<tr> <td>• Financing Fee to PO Finance Co.</td> <td align="right"><u>$18,900</u></td> </tr>
<tr> <td></td> <td align="right">$648,000</td> </tr>
<tr> <td>Excess available funds sent to Surge Tech. </td> <td align="right">$201,000</td> </tr>
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<h1 style="text-align:left;font-size:24px; color:#346633; font-weight:700;margin-bottom:0px;margin-top:40px;">Need for "Other" Lender to Repay the PO Finance Compnany</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:100%;margin-bottom:20px;margin-top:0px;">Purchase Order Financing is only temporary financing. The PO Finance Company expects to exit the transaction once goods are shipped to the customer and the borrower has created a valid accounts receivable from the customer that can be used as collateral by "Other" lenders to repay the PO Finance Company. Before a PO Finance Company accepts a new transaction there is considerable coordination with the "Other" lender as the PO Finance Company must ascertain that the borrower will be eligible for enough funding to be repaid by the "Other" lender. The "Other" lender can be a bank, asset-based lender or factor.</p>
<h1 style="text-align:left;font-size:24px; color:#346633; font-weight:700;margin-bottom:0px;margin-top:40px;">When is the PO Financing Appropriate?</h1>
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<li> Company is not granted enough credit by supplier
<li> Company is put on credit hold or existing lender will not increase the credit line, even temporarily.
<li> Company can potentially bid on large orders typically ignored due to lack of financing with its existing lender.
<li> Company can avoid raising equity or diluting ownership for a temporary financial need.
<li> Company can conserve its cash balances for payroll, marketing, and other operating expenses.
<li> Company's borrowing base certificate has no borrowing availability remaining on a line of credit.
<li> Company's supplier requires cash in advance or letter of credit.</ul>
<h1 style="text-align:left;font-size:24px; color:#346633; font-weight:700;margin-bottom:0px;margin-top:40px;">What types of Companies can Benefit from PO Financing?</h1>
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<li> Distributors
<li> Importers
<li> Exporters
<li> Manufacturers</ul>
<h1 style="text-align:left;font-size:24px; color:#346633; font-weight:700;margin-bottom:0px;margin-top:40px;">Success Stories of how AES Arranged PO Financing to Assist its Clients:</h1>
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<li style="margin-bottom:30px;">An Apparel Importer with insufficient availability on its factoring credit line had an overseas manufacturer that required guarantee of payment prior to manufacturing goods. The Company was able to provide the manufacturer with a letter of credit from a PO Finance Company.
<li style="margin-bottom:30px;"> A Toy Distributor did not have enough availability on its formula-driven, asset-based loan to prepay its overseas supplier to fill its order backlog. PO Financing was used to prepay the overseas supplier.
<li style="margin-bottom:30px;"> A Technology Company that sold electronic products to retailers and distributors received several large orders. The Company's investors did not want to increase their equity investment nor allow new investors to dilute their equity. PO Financing was utilized to provide payment guarantee to the manufacturer who would not begin production without a letter of credit.
<li style="margin-bottom:30px;"> A Housewares Company coming out of Chapter 11 bankruptcy had several large orders, but its overseas manufacturer was not willing to manufacture and ship without a letter of credit in place. The PO Finance Company was able to secure its financing under the confirmed bankruptcy plan with the existing credits and issue a letter of credit to the overseas manufacturer.</ul>
<h1 style="text-align:left;font-size:24px; color:#346633; font-weight:700;margin-bottom:0px;margin-top:40px;">PO Financing Providing Increased Liquidity:</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:100%;margin-bottom:20px;margin-top:0px;">With many forms of working capital financing (bank lines of credit, asset-based loans & factoring), liquidity cannot be created until collateral exists in the form of either accounts receivable or inventory. If credit terms from suppliers are not available, a business cannot acquire the goods that are necessary to convert inventory into accounts receivables. As a result, the business is unable to create the collateral necessary for a lender to secure its loan. However, with Purchase Order Financing, growth is determined by the ability to receive purchase orders from creditworthy customers. Thus, growth has the potential to be exponential!</p>
<h1 style="text-align:left;font-size:24px; color:#346633; font-weight:700;margin-bottom:0px;margin-top:40px;">PO Financing Used in Conjunction with Existing Credit Facilities:</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:100%;margin-bottom:20px;margin-top:0px;">PO Financing can be initiated by either a prospective borrower or by its Commercial Bank or Other Lender. It is a method by which a Bank or Other Lender can help one of its clients grow and become more profitable without increasing its own financial exposure.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:100%;margin-bottom:20px;">As an alternative to saying "No" and having its clients miss potential opportunities, a Bank or Other Lender can recommend PO Financing to its clients when the appropriate situation arises. To facilitate these transactions, Banks and Other Lenders enter Intercreditor Agreements with the PO Finance Company that protect their respective collateral and rights. PO Financing is a valuable tool that Banks and Other Lenders can use to make their clients healthier.</p>
<h1 style="text-align:left;font-size:24px; color:#346633; font-weight:700;margin-bottom:0px;margin-top:40px;">Creative Solutions to Solve the Financial Challenges Caused by COVID-19</h1>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:100%;margin-bottom:20px;margin-top:0px;">Tragically, COVID-19 has created the most daunting financial challenges for businesses in our lifetime. We are reaching out to the business community because we believe we can help! We never shy away from adversity; we embrace and thrive on it. We can Provide Creative Non-Traditional Financing Options to Solve the Financial Challenges Caused by COVID-19. <a style="color:#346633;" href="http://assetenhancement.com/disaster-relief-loans/FENG-8-12-20-link.pdf"><strong>Click Here to Learn More.</strong></p>
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<h1 style="text-align:left;font-size:24px; color:#346633; font-weight:700;margin-bottom:0px;margin-top:40px;">About Asset Enhancement Solutions, LLC</h1>
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Asset Enhancement Solutions, LLC ("AES"), is a financial advisory firm that provides both Investment Banking and Consulting Services to companies considering important transactions such as selling a company, acquiring a company and raising capital. We specialize in arranging debt and equity financing for companies with challenges. These include unfavorable challenges such as operational, legal, tax, financial or liquidity issues or positive challenges such as opportunities for growth, acquisitions and long-term success. AES works with middle market companies, public companies and small businesses.
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<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">AES arranges financing for businesses when traditional banks say no, and as such is a resource for businesses, their accountants and attorneys. AES can help banks maintain customer relationships by arranging financing for their customers with non-traditional funding sources. Asset Enhancement Solutions, LLC has arranged over $500 million in financing for both private and public companies in a variety of industries and geographical areas. We can manage the process of sourcing debt or equity financing which businesses need for short and long-term growth or survival. We never shy away from adversity; we embrace and thrive on it. We have the experience and expertise needed to find Creative Solutions to Financial Challenges.</p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">To learn more about how Asset Enhancement Solutions, LLC can assist you with your transaction, please contact: </p>
<p style="text-align:left;font-family:arial;color:#000000;font-size:15px;width:700px;">Neil Seiden, President<br/>
Asset Enhancement Solutions, LLC<br/>
405 RXR Plaza<br/>
Uniondale, NY 11556<br/>
(516) 767-0100<br/>
<a style="color:#346633;"href="mailto:[email protected]" target="_blank">[email protected]</a> <br/>
<a style="color:#346633;"href="http://www.assetenhancement.com" target="_blank">www.assetenhancement.com</a></p>
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