Purchase Order Financing

What Is Purchase Order Financing?

Purchase order financing is a way to fund the cost of goods tied to a specific customer order. Instead of paying suppliers out of pocket, a financing partner pays them directly so you can produce and deliver the order. Once your customer pays, the financer is repaid and you keep the remaining profit.

How It Typically Works

1. You receive a purchase order from a creditworthy customer (often a retailer, distributor, or government).
2. You present the PO and supplier quotes to the financing partner.
3. The financer pays your suppliers directly for the cost of goods.
4. You deliver finished goods to your customer.
5. Your customer pays the invoice (often to the financer).
6. The financer deducts their fees and sends you the remaining profit.

When PO Financing Makes Sense

• You’ve landed a large order that stretches your current cash or credit capacity.
• Your suppliers require partial or full payment up front.
• Your customer is a strong, established company with reliable payment history.
• You’re growing quickly and need a way to handle bigger orders than your balance sheet currently supports.

Industries That Commonly Use PO Financing

Example Scenarios

Scenario 1 – Big-Box Retail Order

A consumer products company receives a large purchase order from a national retailer. Suppliers require 50% down and the balance before shipment. PO financing covers supplier costs so the brand can fulfill the order and capture the margin instead of turning it away.

Scenario 2 – Fast-Growing Distributor

A distributor wins several new contracts at once. Their current line of credit isn’t large enough to cover all the inventory. PO financing bridges the gap, allowing them to take on the new business and then pay the financer back as customers pay invoices.

Scenario 3 – Importer With Long Lead Times

An importer needs to place a large order with an overseas factory that requires upfront payment. PO financing funds the production, and the transaction is repaid when the end customer pays.

What Financers Look At

With PO financing, the focus is as much on your **customer** and **transaction** as on your company. Providers typically evaluate:

• Credit quality and track record of the end customer.
• Strength and reliability of your suppliers.
• Gross margins on the transaction (is there enough profit after fees?).
• Clear documentation: purchase orders, contracts, and supplier quotes.
• Your experience fulfilling similar orders.

What You May Need to Provide

• Copies of customer purchase orders or contracts.
• Supplier quotes, terms, and lead times.
• Estimated landed cost breakdown (materials, freight, duties, etc.).
• Proof of your company’s ability to perform (history, references, prior orders).
• Basic financials and bank statements for context.

How PO Financing Relates to AR Financing

Purchase order financing often pairs well with **accounts receivable financing**. PO financing helps you buy or produce the goods, and AR financing can help you turn the resulting invoices into cash more quickly. Fast Finance can help you structure both if needed.

How Fast Finance Helps

Fast Finance helps you present your transaction clearly so PO financing partners can respond quickly. We help you:

• Evaluate whether margins are strong enough for PO financing to make sense.
• Identify providers that specialize in your order size and industry.
• Compare fees, structures, and documentation requirements side by side.

Have a big order on the table and want to see if PO financing fits? Check my PO financing options