Purchase Order Finance

Purchase order finance (PO finance) is a short-term funding product that enables businesses to fulfil customer orders they would otherwise be unable to fund. The lender pays the business's supplier directly against a confirmed purchase order from the business's customer. When the customer pays, the lender is repaid.

PO finance is particularly useful for businesses that win large orders but lack the working capital to fund the goods or materials required to fulfil them. It bridges the gap between paying for supply and receiving customer payment. It is distinct from invoice finance, which requires goods or services to already be delivered and invoiced.

Common users of PO finance include distributors, wholesalers, importers, and manufacturers that operate on thin margins and cannot hold large inventory positions. It is often used alongside invoice finance - PO finance funds the production or procurement cycle; invoice finance funds the gap between invoicing and payment.

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