Factoring Company- Glossary > Factoring Terms > Purchase Order Financing

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This refers to the assignment of purchase orders to a third party who then assumes the obligation of billing and collecting. Typically, this form of financing is tied to a specific transaction where the company requires cash to be able to acquire the raw materials to manufacture the goods for which it has received the purchase order. Because the third party assumes both the production risk and the collection risk, this form of financing can be costly.


Last updated on September 28, 2009 by FACTOR KING, LLC