1st Commercial Credit: The Myth of Stand-Alone Purchase Order Financing

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1st Commercial Credit: The Myth of Stand-Alone Purchase Order Financing

At 1st Commercial Credit, we’ve been financing small and mid-sized businesses for more than 20 years. One of the biggest misconceptions we see in the market is the idea that Purchase Order (PO) Financing can stand alone.

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The truth is: PO financing almost always requires invoice factoring as the repayment mechanism. When two separate lenders are involved, this means a formal intercreditor agreement must be put in place to coordinate repayment between the PO finance company and the factoring company.

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Why PO Financing Needs Factoring

PO financing is designed to cover supplier, production, and shipping costs so you can accept larger orders. Once the goods are delivered and an invoice is created, the PO lender needs to be repaid immediately.

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That repayment typically comes from factoring the invoice:

1. The factoring company advances funds against your receivable.

2. Those funds first pay down the PO financing.

3. Any remaining balance is advanced to you for working capital.

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This ensures the PO financier is taken out of the transaction while the factoring company retains ongoing control of the receivable.

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How 1st Commercial Credit is Different

Most PO financing providers will not finance the receivable or collect accounts receivable, so they require a third-party factor to provide the takeout. That means you’re forced into a multi-lender structure with intercreditor agreements.

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At 1st Commercial Credit, we self-fund both PO financing and factoring.

• This means in most cases, no third party is required, and no external intercreditor agreement is needed.

• You get one lender, one agreement, and a seamless process from supplier payment through receivable collection.

• For clients, that means faster approvals, simpler paperwork, and fewer moving parts.

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Only in rare, unique circumstances do we bring in a third-party finance company, and when that happens, we structure the intercreditor agreement on your behalf.

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Our PO Finance Programs

We provide:

• Finished Goods Financing

• Light Assembly & Production Financing

• Funding for Shipping, Duty, and Overhead Costs

• Solutions tailored to small and mid-size businesses with recurring orders

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Setups are quick: factoring in 3–5 days, PO finance approval in 5–10 days.

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The Takeaway

If you’re looking into PO financing, here’s what you need to know:

• Stand-alone PO financing without factoring doesn’t work in practice.

• Most lenders require a third-party factor and an intercreditor agreement.

• 1st Commercial Credit is different, because we self-fund both factoring and PO financing, you get a single-source solution that’s faster, cleaner, and designed for growth.

1st Commercial Credit simplifies PO financing. With one lender, one agreement, and self-funded solutions, we give you the working capital to take on bigger orders, pay suppliers, and grow without the complexity of juggling multiple finance companies.