If you’re a CPG founder selling into retail, you’ve probably lived this moment:
You land a large purchase order from a retailer or distributor—Costco, Target, UNFI, KeHE, etc.
It’s a big win… until you realize you don’t have the cash to produce, ship, and deliver it.
That’s where Purchase Order (PO) Financing comes in.
What Is Purchase Order Financing?
Purchase Order Financing is a short-term funding solution that helps you pay suppliers and fulfill confirmed purchase orders before you’ve been paid by the retailer.
In simple terms:
A financing partner advances capital so you can produce and deliver the order, then gets repaid once the retailer invoice is paid.
It’s designed for brands that are growing faster than their cash balance.
When PO Financing Makes Sense
PO financing is typically a good fit when:
- You have a confirmed PO from a reputable retailer or distributor
- Your supplier requires payment upfront or before shipment
- Your margins can support a short-term financing fee
- You don’t want to dilute equity or max out a line of credit
It’s especially common in food & beverage, wellness, beauty, and other inventory-heavy CPG categories.
Step-by-Step: How PO Financing Works
1. You Receive a Purchase Order
A retailer or distributor issues a PO to your brand outlining quantities, pricing, and delivery timelines.
This PO is the foundation of the financing.
2. Financing Partner Reviews the Deal
The funder underwrites a few key things:
- Retailer / distributor creditworthiness
- Supplier reliability
- Unit economics and gross margin
- Delivery and payment timelines
Importantly, the focus is often more on the retailer paying than your balance sheet.
3. Funds Are Advanced to Support Production
Once approved, the financing partner advances capital to cover costs like:
- Manufacturing
- Ingredients / raw materials
- Packaging
- Freight and logistics
- Sometimes labeling, compliance, or co-packing
Funds may be paid directly to the supplier or through the brand, depending on structure.
4. You Deliver the Product
Your supplier produces the goods, ships them, and the retailer receives the inventory.
At this point, the PO converts into an invoice.
5. Retailer Pays the Invoice
When the retailer pays (often Net 30–90 days), those funds go toward repaying the financing.
In many cases, brands then roll into invoice factoring for a smoother end-to-end cash flow cycle.
How Much Does PO Financing Cost?
PO financing is typically priced as a monthly fee, not an APR.
Springcash ranges ~1%–2% per month.
Because it’s short-term and tied to a specific order, many founders view it as a cost of growth, not long-term debt.
PO Financing vs. Other Funding Options
Compared to equity:
- No dilution
- No board seats
- No long-term commitments
Compared to bank loans or lines of credit:
- Faster approval
- Based on POs, not historical cash flow
- More flexible for fast-growing brands
Compared to MCA / revenue-based financing:
- Tied to a specific transaction
- No daily or weekly sweeps
- Cleaner unit economics
Common Founder Mistakes to Avoid
- Ignoring margins: If the deal is already thin, financing can wipe out profits
- Underestimating timelines: Delays can increase fees
- Over-financing too early: PO financing works best once demand is real and repeatable
- Not planning the invoice stage: The best setups handle PO financing and invoice funding together
The Big Takeaway
Purchase Order Financing exists to solve one core problem:
“I have demand, but I don’t have the cash to fulfill it.”
Used correctly, it allows founders to:
- Say “yes” to large retail opportunities
- Scale without giving up equity
- Smooth cash flow during high-growth periods
The key is working with a partner who understands CPG, retail timelines, and founder-friendly structures—not just capital.
