If you are an importer seeking financing to help you fill a specific order, you should talk to CIT. Purchase order financing may be the solution you are looking for to finance your import sales.

Below are some of the most frequently asked questions about purchase order financing. If you have additional questions or if you would like to discuss this service with CIT, please e-mail us or call us at (800) 248-3240. We look forward to working with you!

Frequently Asked Questions

What is purchase order financing?
Who is eligible?
What is included?
How does CIT's Purchase Order Financing Work?
What does this service cost?
How can I learn more?

What is purchase order financing?

Purchase order financing is a service used by importers to move goods through retail distribution channels. Under this program, CIT Commercial Services will finance the purchase of inventory by using the inventory, confirmed purchase orders for the inventory, and the accounts receivable generated from the sale of the inventory as "collateral."

This service is an alternative source of financing for importers. It tends to be used on a one-time or transactional basis rather than on an ongoing basis. Purchase order financing encompasses a broad range of services and capabilities.

Who is eligible?

CIT offers this service to experienced importers or distributors of finished goods from overseas manufacturers on letter of credit terms. Typically, these importers or distributors have good relationships with their customers (or retailers) but lack the ability to finance the sales. This can be because they are unable to get financing or their lender is not willing to increase their current lending facility.

What is included?

• Letters of credit opened against purchase orders
  Traditionally, asset-based lenders did not consider purchase orders as part of eligible collateral. Under this program, CIT will open letters of credit against confirmed purchase orders to import inventory.

• One-stop shopping
  The only service provider you need to call is CIT. We will organize and manage all inspections and logistical and financial requirements to ensure a smooth transaction from the factory to the retail floor.

• Asian expertise
  CIT has an Asian subsidiary based in Hong Kong that is well positioned to provide operational support for Asian suppliers.

• Warehouse capability
  CIT has arranged for an experienced warehouse and logistics company to handle and manage your goods. This means you do not have to worry about warehousing, logistics, and adhering to retailers' detailed packing and shipping requirements. You may even benefit from a reduced level of deductions related to shipping problems.

How does CIT's purchase order financing work?

Step 1.
The importer submits an application and a fee which covers the cost of the extensive due diligence CIT must perform prior to approval. The importer will also submit the documents needed to begin the due diligence process.

Step 2.
CIT begins a detailed investigation of the importer, the customer/retailer, the supplier and the product.

Step 3.
CIT will do the following:

• Verify the documentary requirements of the purchase order.
  
• Secure an inspection certificate signed by a CIT-designated agent.
  
• Secure compliance insurance to protect CIT against fraud committed during the inspection process.

Step 4.
Your supplier will ship the goods FOB (free on board) port of export and title will pass to you; however, the bill of lading is consigned to CIT. Your supplier is paid under the terms of the letter of credit.

Step 5.
The goods are handled and cleared by a CIT-designated customs broker. CIT will advance freight and duty payments for your account. A designated trucking company delivers the goods to a designated warehouse where the goods are immediately inspected and counted. The warehouse reports the condition and quality of the merchandise and it will be instructed to ship goods only against CIT's approved orders. The warehouse also prepares invoices that bear a notification of assignment to CIT.

Step 6.
CIT will collect from the customer/retailer, deduct all fees and charges, repay all outstanding loans and remit the balance to you.

What does this service cost?

Due to the detailed and comprehensive amount of initial investigation, ongoing collateral management and CIT's risk involved in this program, this service has a higher cost than most financing programs.

Want to learn more?

For more information about how CIT's Purchase Order Financing can finance your imports, call (800) 248-3240 or e-mail us. We look forward to working with you!