Editing Purchase order (section)

== Purchase Order Finance (or PO Finance) ==
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The term '''"purchase order finance"''' (PO finance) is used to refer to a type of financing that helps buyers to receive financing help from another entity to prepay the cost of goods (and sometimes services). This takes the form of a loan or purchase agreement that can be with or without recourse, depending upon the structure of the deal. There are very few purchase order finance companies, as the market is small, niche, and rarely advertise. Oftentimes, PO finance companies will work alongside factoring or accounts receivables finance companies to provide a complete financing package. Factoring companies like LSQ, Riviera Funding,  and Triumph, among others, work with companies like King Trade or PayMeFaster to achieve the combined package of PO financing and receivables financing (factoring). <ref>{{Cite web |title=Invoice Factoring Lenders {{!}} Recommended Invoice Factoring Companies |url=https://www.funderintel.com/invoice-factoring-lenders |access-date=2024-11-11 |website=Funder Intel |language=en}}</ref><ref>{{Cite web |title=Best Factoring Companies Of 2024 – Forbes Advisor |url=https://www.forbes.com/advisor/business-loans/best-factoring-companies/ |access-date=2024-11-11 |website=www.forbes.com}}</ref>

Many transactions are between a Client company that is selling to a large Buyer, and buying from a Supplier in Asia, South America, or Europe. An example would be that Client buys goods from Supplier at $500 per item and sells to Buyer for $600 per item. In this case, the PO finance company would help by paying for (financing) the goods from the Supplier at $500, those ship to the Client, then the Buyer. 30-60-90-120 days later, the Buyer and would pay the PO finance company at $600 per item. The PO finance company would then pay down their loan and remit the balance to Client. <ref>{{Cite book |title=Supply chain finance |date=2017 |publisher=now |isbn=978-1-68083-376-8 |editor-last=Kouvelis |editor-first=Panos |series=Foundations and trends in technology, information and operations management |location=Boston |editor-last2=Dong |editor-first2=Lingxiu |editor-last3=Turcic |editor-first3=Danko}}</ref><ref>{{Cite journal |last=Chhabra |first=Chhabra |date=2021 |title=SUPPLY CHAIN FINANCE BY DEVELOPMENT BANKS AND PUBLIC ENTITIES |url=https://documents1.worldbank.org/curated/en/359771613563556978/pdf/Supply-Chain-Finance-by-Development-Banks-and-Public-Entities-Handbook.pdf |journal=The World Bank}}</ref><!--== Direct and indirect procurement == 
'''Direct procurement''' is what a company needs to produce a finished product or provide a service. For example: scrap glass for glass production or sand, chemicals for drug production, contract manu</reffacturing.
Each industry has its own categorisation, a division into direct and indirect procurement. There are borderline categories, such as transportation of finished goods.<ref>{{Cite web|title=Direct vs. Indirect Procurement|url=https://drydengroup.com/direct-indirect-procurement/ |accessdate=2022-10-25|work=drydengroup.com}}</ref>
 
Direct procurement:<ref>{{Cite web|title=Need-to-knows of the procurement management process|url=https://www.tradogram.com/blog/need-to-knows-of-the-procurement-management-process|accessdate=2022-10-25|work=tradogram.com}}</ref>
* cost categories (more than 50% of total costs);
* high impact on product quality, revenues and profits;
* management control (usually there is a procurement department);
* high level of digitalisation;
* strong integration of production, logistics; other stakeholders in the background;
* stable suppliers, production cycle, high system rigidity;
* cost optimisation projects are permanent, aiming for short-term results not at the expense of price, but rather at the expense of consumption.
Indirect procurement:<ref>{{Cite web|title=What Is Indirect Procurement?|url=https://www.approve.com/blog/indirect-procurement-guide/|accessdate=2022-10-25|work=approve.com}}</ref>
* less costly categories;
* revenue impact is high, but more indirect;
* lack of a unified management strategy;
* scattered functions - the procurement department covers a small part of it: little data, information, attention to categories, low level of digitization;
* there are few or no category experts;
* internal clients are often the buyers themselves for their own functions (IT, marketing, HR, logistics), each with their own stable procurement scheme-->