For Consumer Packaged Goods (CPG) brands, maintaining a steady flow of inventory is essential to meeting customer demand and sustaining growth. However, securing the capital necessary to fulfill large orders can be challenging—especially for small or growing brands. Two popular funding solutions to address this challenge are purchase order financing (PO financing) and Kickfurther’s inventory financing.
While both options can help businesses bridge cash flow gaps, they work in distinct ways and come with unique advantages and drawbacks. In this blog, we’ll break down how purchase order financing and Kickfurther’s inventory funding work, compare their pros and cons, and help you determine which is the better fit for your CPG brand.
What is Purchase Order Financing?
Purchase order financing is a funding option that helps businesses fulfill large orders when they lack the necessary capital to cover production costs. With PO financing, a third-party lender (a PO financing company) pays the supplier directly to produce and deliver goods to the customer. Once the customer receives the order and pays the invoice, the lender deducts their fees, and the remaining balance goes to the business.
How It Works:
- A business receives a large purchase order from a retailer or customer.
- The business applies for PO financing and, if approved, the lender pays the supplier to fulfill the order.
- The supplier manufactures and ships the goods directly to the customer.
- Once the customer pays the invoice, the lender deducts their fees and sends the remaining funds to the business.
Pros of Purchase Order Financing:
- No Need for Upfront Capital: Businesses can fulfill large orders without using their own cash.
- Supplier Payments Covered: The lender pays the supplier directly, ensuring production continues smoothly.
- Growth Opportunity: Helps businesses accept and fulfill large orders that would otherwise be impossible due to cash flow constraints.
Cons of Purchase Order Financing:
- Strict Qualification Requirements: PO financing companies typically require strong customer creditworthiness, meaning your buyers (not just your business) must have a solid history of on-time payments.
- High Fees: Lenders charge significant fees (often ranging from 2% to 6% per month), reducing profit margins.
- Limited Use Case: Only available for purchase orders from established customers, meaning businesses must already have confirmed sales.
What is Kickfurther’s Inventory Financing?
For physical product companies (CPG companies), or those producing shelf-stable consumables, a growth funding option that provides larger amounts than traditional financing and at faster speeds is inventory funding with Kickfurther.
Kickfurther funds up to 100% of your inventory costs on flexible payment terms that you control. Kickfurther’s unique funding platform can fund your entire order(s) each time you need more inventory, so you can put your capital on hand to work growing your business without adding debt or giving up equity.
Why Kickfurther?
No immediate repayments: You don’t pay back until your product sells and you control your repayment schedule.
Non-dilutive: Kickfurther doesn’t take your equity.
Not a debt: Kickfurther is not a loan, so it does not put debt on your books, which can sometimes further constrain your access to additional capital providers and diminish your valuation if you approach venture capital firms.
Quick access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory.
Purchase Order Financing vs. Kickfurther’s Inventory Financing
| Feature | Purchase Order Financing | Kickfurther’s Inventory Financing |
| Purpose | Funds purchase orders from established customers | Funds inventory purchases for general sales |
| Repayment Terms | Repayment occurs when the customer pays the invoice | Repayment occurs as inventory sells |
| Who Pays the Supplier? | PO financing company pays the supplier | Business uses Kickfurther funding to pay the supplier |
| Debt or Equity? | Loan-based (adds debt to balance sheet) | Non-debt financing (off-balance-sheet) |
| Funding Speed | Moderate (approval required) | Fast (funding typically happens quickly) |
| Risk | High lender fees and potential financial risk if customers delay payment | Less risk since repayment aligns with sales performance |
| Best For | Businesses with confirmed customer purchase orders but insufficient capital | Businesses that need inventory funding for multiple sales channels |
Which is the Best Option for Your CPG Brand?
Choosing between purchase order financing and Kickfurther depends on your business model, sales strategy, and financial needs. Here’s a quick guide to help determine which option is best for you:
- Choose Purchase Order Financing If:
Your business regularly receives large purchase orders from established customers.
You need supplier payments covered upfront for confirmed sales.
You are comfortable with high fees in exchange for fulfilling large orders. - Choose Kickfurther’s Inventory Financing If:
Your business sells through multiple channels (retail, e-commerce, wholesale) rather than fulfilling individual orders.
You want to fund inventory without taking on debt.
You need flexible repayment terms that align with actual sales performance.
For many CPG brands, Kickfurther offers a more scalable and financially flexible solution since it allows businesses to secure inventory without immediate financial pressure. However, if your primary challenge is fulfilling large purchase orders from specific customers, PO financing might be a suitable option despite its higher fees.
Final Thoughts
Both purchase order financing and Kickfurther’s inventory financing offer valuable solutions for CPG brands looking to grow without tying up cash. While PO financing is a great tool for businesses with confirmed sales, it comes with high fees and strict requirements. On the other hand, Kickfurther provides a non-debt, sales-aligned funding model that helps brands scale inventory without immediate repayment pressure.
Ultimately, the best choice depends on your business’s specific needs, financial health, and growth strategy. If you’re looking for a funding solution that allows for flexibility, preserves cash flow, and aligns with your sales performance, Kickfurther’s inventory financing is a powerful alternative worth considering.
