Otherwise known as ‘Purchase Order Finance’. The principle criteria is a confirmed purchase order from a creditworthy customer. There is little focus on the actual business itself in terms of it’s financial strengths or weaknesses. For example, we have worked with several fashion designers and fashion houses that required funding on receipt of a purchase order received from, e.g, Selfridges. Once the lender had purchased the pre-ordered goods and they have been delivered to the store, a sales invoice is raised. At this stage, the lender will advance up to 80% of the invoice value enough to repay the balance owing from the initial purchase of goods. Any residual balance is credited back to the business. Thereafter, once the customer’s sales invoice is paid, the business is credited further monies less the lender’s charges. A small business could, in theory, receive a £1m purchase order from a major retailer and use this type of funding to fulfill it when usual cashflow would not allow.