The order you can’t afford to take is the one you can’t afford to lose.
Funding for the supplier costs of a confirmed order — built so a deal bigger than your cash position becomes a deal you can say yes to, on the strength of the order itself.
What is purchase order financing?
Purchase order financing funds the supplier costs of fulfilling a confirmed customer order, using the strength of that order — not your balance sheet — as the basis for the advance. We pay your suppliers so the goods can be produced and shipped; once your customer is invoiced and pays, the facility is settled and the balance comes back to you.
It exists to close a specific gap: you’ve won a large order, but you have to pay suppliers long before your customer pays you, and the cash to bridge that gap isn’t sitting in the account. Purchase order financing lets the order fund its own fulfillment instead of forcing you to turn it down or starve the rest of the business to take it.
How purchase order financing works
The mechanics are straightforward, and they hinge on the order being real, confirmed, and owed by a creditworthy customer. The structure is sized to the supplier cost of that order.
1. You win the order
A confirmed, non-cancelable order from a creditworthy commercial or government customer is the anchor the structure is built on.
2. We pay the supplier
We fund the agreed supplier costs against the order, so production and shipment can proceed without draining your working capital.
3. The invoice settles it
Once goods ship and your customer is invoiced and pays, the facility is repaid and the balance is remitted to you.
Why operators use it
Say yes to bigger orders
Take on volume that would otherwise be out of reach, and let growth happen on the customer’s timeline rather than your cash balance.
Qualify on the order
The creditworthiness of your customer and the strength of the order carry the structure, so your own balance sheet isn’t the ceiling.
Keep cash working
Suppliers get paid without you tying up the capital that runs payroll, operations, and everything else at once.
Bridge, then take out
Pair purchase order financing with receivables financing or invoice factoring so the invoice advance retires the PO facility and can lower your overall cost.
Don’t let a cash gap cost you the contract.
Tell us about the order and your supplier, and we’ll structure the financing around the deal.
What makes an order a good fit?
Purchase order financing works best for resellers, distributors, and importers moving finished goods on confirmed orders. As a general guide, the cleanest deals share a few traits — and where a deal is close, our Deal Desk will tell you straight rather than string you along.
Finished goods
Products resold without significant modification tend to fit cleanly; complex manufacturing adds variables that are reviewed case by case.
Reliable suppliers
Suppliers that are financially stable and able to deliver are central, since the structure depends on the goods actually shipping.
Creditworthy customers
The end customer’s commercial credit anchors repayment, so strong, established buyers make for the strongest deals.
Margins that carry the cost
The order should carry enough margin to absorb the cost of the financing and still leave the deal worthwhile for you.
Who is purchase order financing for?
It fits growing B2B companies — distributors, wholesalers, importers, and resellers — that keep landing orders larger than their cash on hand can fulfill. If the order is confirmed, the supplier is solid, and the customer is creditworthy, the order itself can fund its fulfillment.
Purchase order financing is one part of our wider asset-based lending family, alongside receivables, inventory, and letter of credit financing; the full menu lives on our solutions hub. Capital Source has funded businesses since 2015, manages over $500 million in active funding programs, and lends in 46 states (we do not currently fund businesses in California, Connecticut, Utah, or Virginia). Curious how we evaluate a deal? Read about how we operate.
Frequently asked questions
Do I qualify for purchase order financing on my own credit?
Purchase order financing leans heavily on the creditworthiness of your customer and the strength of the confirmed order, so your own balance sheet isn’t the ceiling. Your business is still reviewed, but the order does much of the qualifying.
What kinds of orders work best?
Confirmed, non-cancelable orders for finished goods, owed by creditworthy commercial or government customers, supplied by reliable vendors. The order should also carry enough margin to absorb the cost of the financing.
Can I combine purchase order financing with other financing?
Yes. Purchase order financing is often paired with receivables financing or invoice factoring, so the invoice advance retires the PO facility once your customer is billed — a structure that can lower your overall cost.
Does purchase order financing cover the whole order?
It is generally structured to fund supplier costs rather than the full invoice value of the order, with the exact structure determined in underwriting based on the deal’s specifics.
Win the order. We’ll fund the part that scares your cash flow.
Tell us where your business is headed and we’ll structure capital around the orders that get it there.