How Growing Brands Fund Production for Major Retailers
How Growing Brands Fund Production for Major Retailers
Getting a purchase order from Walmart, Target, or Costco is a milestone. It is also a cash crisis. You need to pay suppliers, fund production, and ship finished goods before the retailer sends a dollar your way. The gap between receiving a confirmed PO and collecting payment is where growing brands get squeezed, and it widens as orders get bigger.
This guide breaks down five ways brands fund production for major retail orders, what lenders evaluate, and what you need to have ready before you request terms.
Why Retail Orders Create a Cash Gap Before They Create Revenue
Major retailers pay on extended terms. Walmart operates on Net 60 to Net 90 depending on the department. Target stretches to Net 120 in some categories. According to Bridge's 2026 retailer payment terms analysis, extended payment cycles are now the norm, not the exception, and retailers have not reverted to faster payments even as interest rates stabilized.
Your costs, meanwhile, hit immediately:
- Co-packer deposits: Manufacturers often require 30–50% upfront before production starts.
- Raw materials: Ingredients, packaging, and components need to be purchased weeks before delivery.
- Freight and warehousing: Shipping to distribution centers and storing inventory until delivery windows open costs real money.
- Compliance penalties: Walmart fines suppliers 3% of COGS on non-compliant shipments under its On Time In Full (OTIF) program.
For a $500,000 purchase order, you may need to secure $250,000 or more in production costs immediately. Payment arrives months later. That is the cash gap. And missing a delivery window because of funding delays converts a growth opportunity into a penalty.
The 2024 Small Business Credit Survey from the Federal Reserve Banks found that rising costs of goods and wages remained the most commonly reported financial challenge for small businesses, with 77% of firms experiencing these pressures. Smaller manufacturers face disproportionate strain because they lack the cash reserves to wait out long payment cycles.
5 Ways Growing Brands Fund Production for Major Retailers
Each structure solves a different part of the cash cycle. The right choice depends on where your bottleneck sits: before production, after shipment, or both.
1. Purchase order financing
Purchase order (PO) financing funds supplier and production costs tied to a confirmed retail order. The lender pays your suppliers directly, covering up to 100% of the cost of goods sold (COGS) on approved transactions. You do not receive cash in your bank account. Instead, your manufacturer or co-packer gets paid so production can begin.
Lenders underwrite the retailer's creditworthiness, not just your balance sheet. When Walmart issues a purchase order, the lender evaluates Walmart's payment history and reliability. This makes PO financing accessible to brands that cannot qualify for traditional bank loans based on company history alone.
When it fits: You have a confirmed PO from a creditworthy retailer and need to fund production before shipment. Your bottleneck is cash to start manufacturing, not cash after delivery.
Typical terms: Lenders cover 80–100% of manufacturing costs, with fees typically between 1.5–3% per 30-day period. The lender is repaid when the retailer pays the invoice.
Bridge is a direct lender for Walmart purchase orders, funding approved PO costs so brands can produce, ship, and get paid without depleting operating cash. The program also supports Sam's Club suppliers.
2. Inventory financing
Inventory financing uses existing or planned inventory as collateral to secure a loan or line of credit. Unlike PO financing, you don't need a confirmed purchase order. The lender evaluates the liquidation value of your inventory, which means shelf-stable products with broad retail demand tend to qualify more easily.
When it fits: You need to pre-build inventory before orders arrive, whether for seasonal demand, new store rollouts, or maintaining safety stock levels. Your bottleneck is having product ready before the retailer places the PO.
Typical terms: Lenders advance 30–50% of the retail value of qualifying inventory. Rates vary based on product type and lender appetite.
3. Accounts receivable factoring
Factoring lets you sell outstanding invoices at a discount to get paid immediately rather than waiting 60–120 days. The factor takes over collections and remits payment when the retailer pays.
When it fits: Your goods have already shipped, invoices are outstanding, and you need cash now to fund the next production run. Your bottleneck is receivables timing, not upfront production capital.
The distinction matters: Factoring and early payment programs help after delivery and invoicing. They do not fund the production and supplier costs that arise before the order is fulfilled. If your gap is pre-shipment, factoring alone won't solve it.
4. Asset-based lending (ABL)
An asset-based line of credit is secured against a combination of receivables, inventory, and sometimes equipment. ABL facilities provide more flexibility than single-purpose structures because they draw against multiple asset classes.
When it fits: You have a mix of receivables, inventory, and fixed assets that together provide enough collateral for a revolving facility. You want ongoing access to working capital rather than transaction-by-transaction funding.
Trade-off: ABL lines require more documentation and financial reporting. Lenders monitor borrowing base certificates monthly. For brands with clean financials and consistent retail relationships, ABL can be the most cost-effective option. For earlier-stage brands, qualification is harder.
5. Equity or operating cash
Many founders default to using equity proceeds or cash on hand to fund production. It works in the short term but creates a capital allocation problem: every dollar tied up in production for a confirmed order is a dollar unavailable for sales, marketing, hiring, or the next product launch.
When it makes sense: The order is small enough that production costs don't strain operations. You have excess cash and no higher-value use for it.
When it doesn't: You're using equity capital raised for growth to fund routine production on confirmed orders. The issue is not just cost. As KPMG's 2025 Consumer Products survey noted, 42% of CPG companies are looking to grow in big-box retailers and 61% are growing discount store distribution. That growth requires capital for marketing, trade spend, and distribution. Using it on production instead limits what you can invest in the opportunities that generated the order in the first place.
How To Choose the Right Production Funding Structure
The comparison is usually not PO financing versus the cheapest credit line already in place. The real question is: what is the next dollar of capital the business would otherwise use to fill this order?
Use this decision framework:
Your situation | Best fit |
|---|---|
Confirmed PO, no cash to start production | Purchase order financing |
Need inventory before orders arrive | Inventory financing |
Goods shipped, waiting on retailer payment | A/R factoring |
Mix of receivables and inventory to collateralize | Asset-based lending |
Small order, excess cash, no competing use | Operating cash |
For growing brands entering or expanding in retailers like Walmart, the structures often layer. PO financing covers pre-production costs. Factoring accelerates cash after delivery. Together, they shorten the cash conversion cycle without draining equity capital.
Bridge connects you with the right structure for your situation. For Walmart purchase orders, we fund directly. For additional capital needs, we match you with specialized lenders across working capital, inventory, and A/R financing.
What Lenders Evaluate on a Production Funding Request
A signed PO does not automatically solve cash timing. Lenders still evaluate several factors before approving a production funding request:
- Retailer creditworthiness: Walmart's payment reliability makes its POs strong collateral. Smaller or less established retailers may receive more scrutiny.
- Gross margins: Lenders want to confirm there is enough margin to cover financing costs and still leave the brand profitable. Most PO lenders look for gross margins of 25% or higher.
- Supplier credibility: Can your manufacturer or co-packer actually deliver on time and at the quoted cost? Lenders verify production capability.
- Fulfillment plan: A clear timeline from production start to delivery at the retailer's distribution center. Gaps or ambiguity in the fulfillment plan raise underwriting concerns.
- Repayment path: How and when the lender gets repaid. For PO financing, repayment comes from the retailer's invoice payment. For other structures, repayment depends on asset liquidation or revenue.
The better your documentation, the faster the process moves. Lenders who receive complete, organized submissions can issue term sheets faster because they spend less time chasing information.
Document Checklist: Get Lender-Ready Before You Submit
Having these documents ready before you request financing reduces back-and-forth and accelerates underwriting:
- Confirmed purchase orders: Valid POs showing retailer, quantities, pricing, and payment terms
- Trailing 12-month financials (T-12): P&L and balance sheet with notes breaking out trade spend, slotting fees, and promotional allowances
- A/R aging report: Outstanding invoices showing payment velocity and retailer reliability
- Inventory list: SKU-level detail with cost basis, units on hand, and retail pricing
- Supplier or co-packer agreements: Production contracts showing costs, timelines, and delivery terms
- Fulfillment timeline: Clear schedule from production start to retailer delivery
Missing or incomplete documents are the most common reason production funding requests stall. Organize everything in one place before you submit.
FAQs
Can I get production funding without a confirmed purchase order?
- Yes, but the structure changes. Without a confirmed PO, you cannot use purchase order financing, since the PO itself is the collateral. Inventory financing or an asset-based line of credit can fund production based on the value of existing inventory or other assets instead.
What is the difference between PO financing and early payment programs?
- PO financing funds production and supplier costs before goods ship. Early payment programs, including supply chain finance and invoice acceleration, help you get paid faster after delivery and invoicing. They solve different parts of the cash cycle. If your gap is pre-shipment, you need PO financing, not early payment.
How long does it take to get funded?
- Timeline depends on the lender and the completeness of your submission. Bridge issues term sheets within 24 hours for Walmart purchase orders when documentation is complete. Funding follows after final underwriting and verification.
Does PO financing work for first-time Walmart suppliers?
- Yes. Because lenders underwrite Walmart's creditworthiness rather than the supplier's balance sheet, first-time suppliers with confirmed POs can qualify. Lenders still evaluate margins, supplier credibility, and fulfillment plans, but the retailer's payment reliability carries significant weight.
Can PO financing and factoring work together?
- Yes. PO financing covers production costs before shipment. Once goods are delivered and invoiced, factoring can accelerate the receivable so you get cash faster than waiting for the retailer's Net 60–90 payment. Together, they compress the full cash conversion cycle.