What is Purchase Order Financing?

Funding that helps pay suppliers to fulfill a confirmed customer order.

For example, a small manufacturer receives a $200,000 purchase order from a major retailer but lacks the cash to buy materials. A purchase order financing company advances $140,000 to cover the supplier costs, allowing the manufacturer to fulfill the order — then repays itself with interest once the retailer pays the invoice.

Why it matters: It allows a business to fulfill massive orders they otherwise couldn't afford, turning guaranteed sales into immediate cash.