Glossary
Funding to fulfil a confirmed customer order.
✓ Checking what you qualify for does not affect your credit score.
Short answer: Purchase order financing pays your supplier to produce or deliver goods for a confirmed customer order, and the financier is repaid when your customer pays. A distributor with a $100,000 order can use it to pay the supplier up front. It suits product businesses with creditworthy customers.
Key facts
Related: Business Funding Glossary: 70 Terms Explained · Factor Rate Explained: How MCA Pricing Works · What Business Funding Costs in Canada, Compared · Business Funding Comparisons for Canadian Owners · Business Funding Calculators in Canadian Dollars
Funding to fulfil a confirmed customer order.
A financier pays a supplier to produce or deliver goods for a confirmed order and is repaid when the customer pays.
It funds growth tied to specific orders.
A distributor with a $100,000 order uses PO financing to pay the supplier.
Used by distributors and resellers.
Reviewers see PO financing as a specific obligation.
It suits product businesses, not services.
Glossary terms are most useful next to the decisions they affect. If you are comparing offers, read the pages on factor rates, payback amounts and the repayment cap together. If you are preparing an application, the documents checklist and requirements pages explain what is read. And if a term in an agreement is unclear, ask the funder to explain it in writing before you sign; a good funder will.
PO financing is usually more expensive than bank credit but can unlock orders a business could not otherwise fill. It works best with reliable suppliers and creditworthy customers.
PO financing appears as payments made directly to your supplier by the financier, followed by your customer paying the financier or you, and the financier's fee being settled. In your statements it can look different from other financing because the money may never pass through your account.
Most funding terms come back to two questions: how much will I repay in total, and how will each payment affect my cash in a normal month and a slow one. When you meet an unfamiliar term in an offer or agreement, translate it into those two answers before deciding whether it matters. If a funder cannot explain a term in plain language and with your own numbers, treat that as useful information about the offer.
These terms often appear alongside purchase order financing in offers, agreements and conversations with funders:
Reviewed by the Merchant Fund Express team on October 12, 2026. Official pages checked as of that date.
No; factoring advances on invoices, PO financing on orders.
See the related guides and the comparison pages, or apply and ask.
No. It is educational information, and agreements vary.
Educational information only. It is not legal, tax or accounting advice.
Same-day decision. Applying takes a few minutes and will not affect your credit score.
