Replies to post #304 on Zevotek, Inc. (ZVTK)

[littlefeets]

Jtokon,
Thank you Sir.
The best is yet to come,
Nick Donohue

[littlefeets]

Here is a post wrtiten by alian_scones, that helpped me understand Purchase Order Financing. Thank you, alian scones.


Posted by: alien_scones
In reply to: alien_scones who wrote msg# 117 Date:12/5/2007 7:39:36 AM
Post #of 314

Purchase Order Financing:

http://www.barclayassociates.com/purorfin.html

An Example of a typical "Supplier to Customer" Purchase Order transaction

The following scenario illustrates a typical Purchase Order transaction. All costs are best estimates, but should be close to the actual charges.
A transaction cannot be executed on bulk commodities such as grain, corn, coal etc. Goods must be packaged or bound in bags, cases or strapped units which can be counted.
You must have a supplier who is capable of delivering goods that strictly comply with samples furnished by you.
The shipment must go directly to the final customers or to a bonded warehouse for immediate breakdown and re-shipment to the customer.
The shipment cannot go to your plant or warehouse.

1) You receive a purchase order from your customer. The purchase order must be unconditional. It cannot contain consignment or guaranteed sale clauses. The purchase order must be issued by a company with a good credit rating.

2) A letter of credit or bank draft is opened by the financing source in favor of your supplier. The supplier may be located in the U.S. or overseas. The CUSTOMER (issuer of the purchase order) must be located in the United States.

3) Funds are released to your supplier when the goods are inspected at point of embarkation, and a certificate of specification compliance is issued. Compliance is based on samples furnished by you. The cost to inspect and to issue the certificate is usually $500 to $700 per shipment but may be more based on factors such as the location of inspection site, type of merchandise etc.

4) Goods are shipped via water or air. There is a charge for the opening of the letter of credit or the initiating of the bank draft. Goods must either be shipped direct to your customer or to an approved public bonded warehouse. The merchandise may not pass through your own premises. The merchandise may not be materially changed or repackaged without prior approval from the financing source.

5) You issue your invoice after verification of receipt of the goods by your customer.

6) The invoice is then purchased by the financing source and a financing (factoring) charge begins from the time of invoicing until the invoice is paid by your customer.

7) Barclay Associates charges a small fee based on the total invoice amount factored. If factoring is not involved (i.e. when the payment terms are C.O.D.) then this fee is based on the amount of the letter of credit opened.

8) You would pay any other normal fees for freight forwarding, cargo insurance, port fees etc. The "Supplier to Customer" Purchase Order program enables you to take on an unlimited amount of business using good suppliers and selling to credit-worthy customers. Using this program you can forget about financing shipments and can concentrate of selling to your markets.