PO Financing
Never turn down a big order because of cash flow
$25K – $10MFunding Range
15–30 daysSpeed
Never turn down a big order because of cash flow
Purchase order financing — also called PO financing or PO factoring — gives you the capital to pay your suppliers upfront when you land a large order but don’t have the cash to fulfill it. Instead of turning down the deal or scrambling for funds, a purchase order factoring company pays your supplier directly so you can deliver the goods, collect payment from your customer, and keep the profit. It’s built for product-based businesses that are growing faster than their cash flow can keep up with. Bay Street connects you with PO factoring companies and PO financing lenders who understand your margins and move fast. For a full breakdown of how the product works, costs, and when it beats other financing options, see our <a href="/lending-resources/purchase-order-financing-guide">purchase order financing guide</a>.
When a large order comes in and you don’t have the capital to cover supplier costs, PO financing bridges that gap so you never leave money on the table.
Approval is driven by the creditworthiness of your end customer — not your balance sheet. If you have a solid buyer, you can likely get funded.
The financing company pays your supplier on your behalf — you never touch the money. This reduces risk and speeds up the process for everyone involved.
Fulfill a large retail or wholesale order, Cover raw material costs for a new contract, Scale production without draining cash reserves, Accept government or enterprise purchase orders, and Bridge the gap between order and payment.
Don’t meet every requirement? Apply anyway — we evaluate the full picture.
Share the PO, your supplier details, and your customer info. We evaluate the deal based on the strength of your end buyer.
Once approved, the financing company pays your supplier directly so production can begin immediately.
You deliver the goods to your customer. When your customer pays, the financing company takes their fee and you keep the profit.
Purchase order financing is priced as a fee on the amount funded, charged per 30-day period from supplier payment until your customer pays. Typical pricing runs 1.5% – 3.5% per 30 days, with most transactions completing in 30–90 days.
| Transaction profile | Supplier cost covered | Fee per 30 days |
|---|---|---|
| Finished goods, strong end customer, short cycle | Up to 100% | 1.5% – 2.5% |
| Standard resale or distribution | 70% – 100% | 2.0% – 3.0% |
| Manufacturing, assembly, or long lead time | 50% – 70% | 2.5% – 3.5% |
Run the margin maths before assuming it works. On a $200,000 PO with a 25% gross margin ($50,000 profit) and a 60-day cycle at 2.5% per 30 days, financing costs roughly $7,500 — leaving $42,500. Viable. The same deal on a 12% margin leaves $16,500 profit against $7,500 in fees, and the transaction stops making sense. PO financing generally needs a gross margin above 20% to be worth doing.
PO financing underwrites the transaction, not your balance sheet. Three things carry the decision: your customer's creditworthiness, your supplier's reliability, and the margin on the deal.
Strong candidates:
Usually declined:
Time in business and personal credit matter far less here than in any other product. A young company with one large order from a strong buyer is a better PO financing candidate than an established company with a thin-credit customer.
These two products cover opposite halves of the same cash cycle, and pairing them is common.
| Stage | Structure | What it solves |
|---|---|---|
| Order received, goods not yet produced | PO financing | Pays your supplier |
| Goods delivered, invoice issued | Invoice factoring | Advances against the receivable |
Run in sequence, PO financing pays the supplier, and once you deliver and invoice, factoring takes out the PO facility and advances you the receivable. That combination lets a business fulfil orders far larger than its balance sheet would otherwise support — the single most common way small distributors scale into enterprise contracts.
If your constraint is not a specific order but general operating cash, working capital is the simpler instrument. PO financing only makes sense when there is a confirmed order to secure it against.
Yes — “PO factoring” and “purchase order financing” refer to the same product. Some lenders and brokers prefer one term over the other, but functionally they describe a single arrangement: a third party pays your supplier upfront so you can fulfill a confirmed customer purchase order. The fee structure, approval criteria, and process are identical regardless of which term you search for.
Invoice factoring advances you money on invoices you’ve already sent (after delivery). PO financing (also called PO factoring) funds you before delivery — it pays your supplier so you can fulfill the order in the first place. Many businesses use both together: PO financing covers production, then invoice factoring covers the gap until the buyer pays.
Most PO lenders require gross margins of at least 20% on the order. The financing fee comes out of your margin, so the deal needs enough spread to make sense for everyone.
PO financing is designed for product-based transactions where physical goods are being manufactured, purchased, and delivered. Pure service contracts typically don’t qualify, but hybrid deals (products + installation) may.
Most PO financing deals close in 3–7 business days once documentation is submitted. Repeat transactions with the same buyer can fund even faster.
Purchase order financing rates run roughly 1.5–6% of the order value per transaction in 2026, depending on deal size, your gross margin, the creditworthiness of your end buyer, and how long the cycle runs from supplier payment to customer remittance. The fee comes out of your margin, so the deal needs enough spread to work — most funders look for 20%+ gross margins. Bay Street shops your purchase order across 50+ funders to find the lowest all-in rate for your specific transaction.
One application, no credit impact, and a dedicated specialist to walk you through your options. See what you qualify for in minutes.