Landing a contract with a large company or government agency is a milestone. The catch is that big clients often pay slowly, and some orders need significant cash before you can deliver. Invoice and LPO financing exist for exactly this situation.
LPO financing: funding the order
A Local Purchase Order (LPO) is a client’s formal commitment to buy goods or services from you at an agreed price. If you need money to source those goods or execute the job, LPO financing lends against that confirmed order. You deliver, the client pays, and the loan is settled from that payment.
Invoice financing: unlocking money you’re owed
Once you’ve delivered and issued an invoice, the money is owed to you but not yet in your account. Invoice financing advances a portion of that invoice’s value now, so you can keep operating while the client processes payment.
What lenders look at
Because repayment depends on your client, lenders focus on:
- Who the client is. Established corporates and approved partners carry less risk.
- The paperwork. A genuine LPO, contract, delivery note or signed invoice.
- Your track record. Evidence you can deliver what was ordered, on time.
- Payment terms. How long the client usually takes to pay.
Is it right for you?
Invoice and LPO financing make sense when the margin on the contract comfortably covers the cost of the loan. Work out your profit on the job, subtract interest and fees, and make sure what’s left is worth the effort. If it is, financing lets you take on bigger contracts than your current cash would allow.
Have an LPO or unpaid invoice from a reputable client? Peach Financial’s Invoice & LPO Finance Loan converts it into working capital. Learn more or apply online.
