PO Financing Cost to True APR Calculator
True APR = fee ÷ advance × 365 ÷ days
Enter your numbers to see what the fee really costs per year.
TL;DR True APR = fee ÷ advance × 365 ÷ days outstanding A 3% fee for 60 days is an 18.25% APR. Typical PO financing runs 2% to 4% per 30 to 60 day cycle as of Q3 2026.
Fee in dollars
$15,000
True APR
18.25%
The formula
Fee = advance × (fee % ÷ 100) · True APR = fee % × 365 ÷ days outstanding
Worked example
A CPG brand takes a $500,000 advance against a confirmed purchase order at a 3% fee, repaid when the retailer pays 60 days later. Fee = $500,000 × 3% = $15,000. True APR = 3% × 365 ÷ 60 = 18.25%. The same 3% fee for a 30-day cycle would annualize to 36.5%, and for 120 days to about 9.1%.
Cost of common working-capital options (indicative, as of Q3 2026)
| Option | Typical pricing | Approximate APR |
|---|---|---|
| PO financing | 2% – 4% per cycle | 12% – 36% |
| Invoice factoring | 1% – 3% per month | 12% – 36% |
| Merchant cash advance | Factor 1.2 – 1.5 | 40% – 120%+ |
| Bank line of credit | Prime + 1% – 4% | Prime + 1% – 4% |
| Bridge production financing | Repayment aligned to retailer payment | Varies by order |
Pricing is indicative and varies by lender, credit profile, and order quality. For preliminary planning only; not an offer of credit.
Frequently asked questions
How do I convert a flat financing fee to an APR?
Annualize it: APR = fee ÷ advance × 365 ÷ days outstanding. A 3% fee on a $500,000 advance outstanding for 60 days is $15,000, and $15,000 ÷ $500,000 × 365 ÷ 60 = 18.25% APR.
Why do short-cycle fees look small but add up?
Because each cycle re-incurs the fee. A 3% fee sounds modest, but if you finance a new order every 60 days you pay it roughly six times a year, which is why the annualized rate lands near 18% rather than 3%.
What days outstanding should I use?
Count from when the financing funds your purchase order to when the retailer actually pays, not just the invoice terms. In retail that full cycle often runs 60 to 120 days once production, shipping, and payment terms are added together.
When does PO financing make sense despite the APR?
When the margin on the order comfortably exceeds the financing cost and the alternative is not shipping. If a $500,000 order carries $120,000 of gross margin, a $15,000 fee is a good trade; turning down the order costs far more than the financing does.