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Purchase Order Financing

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When a business has cash flow issues, paying for purchase orders can be challenging. Purchase order financing is a short-term solution that lets companies quickly access working capital and keep their operations moving.

If you’re searching for a purchase order financing company, Porter Capital is here to meet your company’s unique needs.

What Is Purchase Order Financing?

With purchase order factoring, a company acquires a cash advance to pay for up to 100% of a purchase order. After the third-party supplier receives payment, produces the agreed-upon goods and delivers the order to the customer, the company invoices the buyer, and the customer directly pays the PO financing lender. The company receives the rest once the lender deducts its fees from the payment.

Here is a quick breakdown of how our PO financing process works at Porter Capital:

  • Your business receives an order.
  • You assess how much the purchase order will cost to complete.
  • You determine PO financing would be beneficial and apply for it through Porter Capital.
  • When approved, we will pay the supplier to complete the purchase order.
  • After payment, the supplier will manufacture and deliver the goods to the customer.
  • You invoice the buyer upon successful order delivery.
  • The customer pays their invoice to Porter Capital.
  • You receive the remaining funds after Porter Capital deducts necessary fees from the payment.

Typically, PO financing works best for businesses that receive more orders than they have the capital to complete. For example, PO financing is often a go-to solution when a small brand gets a large order from one of its best customers but needs more cash flow to pay the supplier for the goods. PO financing can also be a preferred alternative to small business loans.

Remember that PO financing differs from invoice factoring — PO financing provides capital a business can use to cover purchase orders, and invoice factoring supplies funding through borrowed capital from unpaid invoices.

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Top Benefits of Purchase Order Financing

PO financing can be a viable solution for any company that needs assistance meeting customer demand and fulfilling POs with limited capital. While every financing option has different considerations, PO financing offers unique advantages for businesses. If you want to know how PO financing could assist your business, explore the top benefits.

  • Simple process for new companies: PO financing lenders scrutinize supplier and customer creditworthiness more closely than the company receiving the financing, as they want to ensure the supplier will fulfill the invoice and the buyer will pay it. As a result, small, up-and-coming businesses can usually qualify for the financing they need.
  • No need to pay money back in installments: Because PO financing isn’t technically a loan, you don’t need to worry about paying back funds in installments — or planning your budgeting around those payments.
  • Quick, simple access to funds: Unlike traditional financing options, PO financing can get you funding in mere days. This fast access means you can streamline your orders and improve customer satisfaction.
  • The ability to maintain company ownership: Sometimes, when businesses have considerable cash flow problems, they may turn to venture capitalists and other sources to receive funding in exchange for partial ownership of the business. PO invoicing allows you to obtain working capital to mitigate cash flow issues while retaining total company ownership.
  • More time to focus on company growth: Trusting a professional lender like Porter Capital to manage the PO financing process frees you to concentrate on scaling mission-critical areas of your business.
Trusting a professional lender like Porter Capital to manage the PO financing process frees you to concentrate on scaling mission-critical areas of your business.

Frequently Asked Questions

While PO financing is straightforward, you may have lingering questions about how it works or whether your business qualifies. Here are some brief FAQs and their answers to provide more information.

PO financing is ideal for any business that has high order volumes but needs better cash flow to fulfill them. PO financing can be beneficial if your company sells more than it has the inventory to complete. Any kind or size of business can use PO financing, but it’s often the perfect approach for small startups.

It’s easy to apply for PO financing with Porter Capital. Fill out our online application to get started. If you have questions about the process or need to speak to an expert, call us at 888-865-7678.

The lender assumes most of the risk with PO financing. PO financing isn’t a traditional loan, so you don’t have to repay any funds. It’s up to the customer to pay the invoice, so the PO financing company depends on them to complete the process. Additionally, you should know many businesses rely on PO financing daily.

PO financing rates vary depending on the specific transaction. For example, risk factor influences how much a PO financing company might charge you. If you’re curious about how much PO financing might cost for your business and situation, call us at 888-865-7678.