Purchase Order Financing
Capital that funds the cost of fulfilling a confirmed customer purchase order, typically paying suppliers directly so the operator can deliver a contract it could not otherwise carry.
How it works in practice
Once a confirmed PO is in hand from a creditworthy buyer, a PO funder pays the supplier directly, often via letter of credit or wire. The operator delivers, invoices the buyer, and the receivable is then typically factored to retire the PO funding.
PO financing is one of the higher-cost short-term products, but it unlocks revenue an operator could not otherwise recognize. Underwritten correctly, the margin on the delivered contract supports the cost.
Related Entries
See how this structure is used in practice.
View the industry page →