Purchase Order Financing
Definition
Funding that pays your supplier for a specific confirmed customer order, often a large retail order, and is repaid when the customer pays.
Want a deeper explanation?
PO financing can help a small brand take on an order that would otherwise be too big to fund. It relies on the customer's credit and the confirmed order.
Fees are often charged monthly and add up if payment is slow. Watch for: thin-margin orders where financing fees and retailer deductions eat most of the profit.
Example
A retailer orders $300,000 of product. A PO financing company pays your $150,000 supplier cost, and you repay it plus fees from the retailer's payment.