My first big order is bigger than my bank account — now what?

This is the exact problem purchase order financing was built for, and the useful news is that the financier is underwriting the order at least as hard as it is underwriting you. A confirmed, non-cancellable purchase order from a creditworthy national account is a strong piece of collateral — frequently stronger than your balance sheet at this stage.

Here is the shape of a typical structure. The financier pays your supplier directly, commonly covering 70% to 100% of the supplier cost, and is repaid when your customer pays. Cost usually runs 1.5% to 6% of the funded amount for the first 30 days with the meter running after that. On a $380,000 order with a $190,000 supplier deposit that is real money — but it is money against margin you would otherwise never earn at all.

• Whether the purchase order is confirmed and non-cancellable, and who at the retailer signed it
• Your customer's credit rather than yours, because they are the party actually paying
• Your supplier's ability to deliver on time, sometimes verified with the supplier directly
• Gross margin: most financiers want at least 20% to 30% before the arithmetic works

The warning is delivery risk, and it stays yours. If the shipment is late, short, or rejected, the financing does not care — you still owe it, and a first order that goes wrong with a national account costs you the relationship as well as the margin. Purchase Order Financing handles the supplier side and Invoice Factoring can cover the 60 days after delivery. Call the desk with the purchase order and the supplier quote before you accept anyone's terms.