Purchase Order Finance

How purchase order finance works

The provider assesses the order, customer, supplier, margin and delivery risks. Funds may be paid directly to suppliers, with repayment linked to the subsequent customer payment and sometimes an accompanying invoice-finance facility.

Practical UK business example

A wholesaler wins a confirmed order but must pay an approved supplier before delivery. It checks that the order’s margin can cover funding costs and that completion conditions are realistic.

Illustrative example only; not a finance quotation or a client case study.

Why it matters

It may help a business fulfil an order it cannot finance from its existing cash, provided the trade is suitable and commercially viable.

Limitations and common misconceptions

An unverified order or forecast sale is not equivalent to an eligible purchase order. Cancellation, disputes, supplier failure and performance obligations can prevent or reduce funding.

Explore invoice finance or Discuss business borrowing to discuss how the structure relates to your business.