Purchase order financing pays a supplier upfront for a confirmed order a business can’t yet afford to fulfill, repaid once the customer eventually pays.
How it works
The PO amount financed times the monthly fee rate times the number of months until funding is repaid gives the total fee; adding that to the PO amount gives the total to repay.
What this does not include
This does not include the fact that PO financing is often paired with invoice factoring once goods ship — the PO financing repays from the factoring advance rather than waiting for final customer payment, which would shorten the actual funding period below what’s modeled here.
How to use this calculator
- Enter the PO amount, monthly fee rate, and months until funding.
Frequently asked questions
How is PO financing different from a business loan?
PO financing is tied to a specific confirmed order and typically funds the supplier directly rather than the business, with repayment sourced from that specific sale rather than general business cash flow.
Who qualifies for purchase order financing?
Lenders generally look at the creditworthiness of the *customer* placing the order more than the borrowing business itself, since repayment depends on that customer actually paying.
Is PO financing available for service businesses?
Generally no — it’s structured around financing tangible goods a supplier needs to be paid for, not services.
