What is purchase order (PO) financing?

Purchase order financing provides capital to pay your suppliers when you have confirmed customer orders but lack the funds to fulfill them. The PO finance company pays your supplier directly, you deliver the product to your customer, and when the customer pays, you repay the financer plus fees. PO financing is particularly useful for product-based businesses experiencing rapid growth or large orders they cannot self-fund. Fees typically range from 1.5%–6% per month depending on the transaction size and risk. Unlike invoice financing, which covers already-delivered goods, PO financing covers the production or procurement stage before delivery.