How purchase order financing works
- A customer sends you a large purchase order.
- You cannot cover the supplier’s cost out of cash.
- A financing company reviews the order, your customer, and your supplier.
- The financing company pays your supplier directly.
- The supplier produces and ships the goods.
- Your customer pays the financing company.
- The financing company keeps its fee and the amount it advanced, and sends you the rest.
What it costs
Kapitus lists a fee of 1.8% to 6% of the outstanding amount per 30-day period.
Time is the cost driver. A worked example at a 3% monthly fee on $200,000 paid to a supplier:
| Customer pays in | Fee |
|---|---|
| 30 days | $6,000 |
| 60 days | $12,000 |
| 90 days | $18,000 |
The fee can also step up the longer the balance is open. Ask for the full schedule.
Check the fee against your margin on the order. Kapitus’s network requires a profit margin of at least 10%. On a thin-margin order with a slow-paying customer, the fee can take most of the profit.
Who qualifies
Your own credit matters less than the deal. Kapitus lists no minimum credit score for the applicant. What it does require:
- You sell physical goods. No services.
- Your customer is a business or a government agency with good credit and payment history.
- Your supplier has good business credit and a record of delivering.
- The order carries at least a 10% profit margin.
Typical users are manufacturers, wholesalers, distributors, and resellers.
When it fits
- You have a confirmed order from a creditworthy customer.
- The order is too large to fund from cash.
- Turning it down would cost you the customer.
- Your margin comfortably covers the fee.
When it does not
- You sell services.
- Your customer pays slowly and your margin is thin.
- You need ongoing working capital. This is built for individual orders. A line of credit fits a recurring need.
Purchase order financing vs invoice factoring
| Purchase order financing | Invoice factoring | |
|---|---|---|
| When | Before you deliver | After you deliver |
| Pays for | Your supplier’s cost | Your wait for payment |
| Based on | A confirmed order | An issued invoice |
Some businesses use both on the same deal: purchase order financing to produce the goods, then invoice factoring once the invoice goes out.
How to apply
- Fill out our short form.
- Complete the application and upload 3 to 6 months of bank statements.
- Provide the purchase order and your supplier’s quote.
- Review the fee schedule and terms with a financing specialist.
- Sign. The financing company pays your supplier.
Sources
- Kapitus: Purchase Order Financing, checked October 12, 2026