Purchase Order Financing
Say yes to the big order
Purchase order financing pays your supplier for the goods needed to fill a confirmed customer order when your cash flow cannot cover the cost up front. The lender is repaid when your customer pays, so a large order becomes an opportunity instead of a strain.
- Confirmed orders from creditworthy customers
- Supplier paid directly by the lender
- No new term debt on your balance sheet
- Wholesale, manufacturing and distribution
How it works
The steps are simple, and the lender's decision rests mainly on your customer's ability to pay.
- You receive a firm purchase order from a business or government customer
- The lender verifies the order and pays your supplier, often by letter of credit
- Goods ship to the customer and you invoice as usual
- The customer pays the lender, who deducts its fee and remits the balance to you
How it differs from a line of credit or factoring
A line of credit is sized on your business's overall strength and takes time to increase; purchase order financing is sized on the order itself, so it scales with a single large contract. Invoice factoring funds work already delivered by advancing against the invoice; purchase order financing funds the work before it is delivered, and the two are often combined so the factor pays out the purchase order lender once the invoice is issued.
Who it suits
Wholesalers, importers, distributors and manufacturers with resale or finished-goods orders and gross margins of roughly 20 percent or more. Service businesses and orders for custom work with a long production cycle are harder to finance this way. Specialised trade finance lenders lead this market, with some banks, credit unions and BDC offering related working capital solutions; we identify which fits the order.
FAQ
Common questions
What does purchase order financing cost?
Fees are typically charged per month on the amount advanced and depend on the customer's credit and the transaction length. It costs more than a bank line and less than losing the order.
Do I need strong credit to qualify?
The lender looks first at your customer's credit and your supplier's reliability. Your own credit matters less than with a term loan, which makes it suitable for fast-growing companies.
How large does the order need to be?
Most lenders start around $50,000 per order and can go into the millions. We match the lender to the size of your contracts.
Get started
Tell us about your situation
Share a few details and an advisor will follow up within one business day with next steps and the documents to prepare.
Your first call is free
Tell us what you need and we will tell you exactly what it takes. No pressure, no obligation.