What is Purchase Order Financing?
You have a confirmed purchase order from a strong customer, but you need to pay your supplier before you'll see a dollar from the sale. Purchase order financing bridges that gap. We pay your supplier directly so you can fulfill the order, your customer pays on their terms, and you keep the profit minus a financing fee that currently starts around 1.5% per month.
This is short-term, deal-specific capital built for businesses growing faster than their cash flow allows. Wholesalers, importers, manufacturers, and distributors use it to take on orders they'd otherwise have to turn down. The financing cost is higher than a term loan, but the alternative is losing the deal entirely.
How do I qualify for Purchase Order Financing?
Key qualification requirements:
Confirmed Purchase Order
Verifiable PO from a creditworthy customer for finished goods.
Creditworthy Customer
Your customer's ability to pay matters most, not your credit score.
Profit Margins
20% to 30% margins minimum to cover financing cost and still leave profit.
Supplier Details
Supplier must accept third-party payment from the financing company.
Interest Rates and Fees
PO financing runs 1.5% to 6% per month on the advanced amount. That is more expensive than a term loan, but you're paying for speed and scale on a single deal, not long-term debt.
The real cost driver is payment timing. If your customer pays in 30 days, a 3% monthly fee costs you 3%. If they take 90 days, that same fee triples. Know your customer's payment history and build the financing cost into your margins before you commit.
PO financing makes sense when the profit on the order comfortably exceeds the fee and when you would lose the deal without it. We model the numbers with you so you know exactly what you keep after costs.
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