How to Fund a Target or Costco Order Without Draining Cash

If you supply Target or Costco and just landed a large order, the right way to fund it is purchase order (PO) financing. PO financing covers the production and supplier costs tied to a specific retailer order, then gets repaid when the retailer pays.

The alternatives, a business line of credit, invoice factoring, or a merchant cash advance, either arrive too late, cost too much, or drain capital you need to run the business.

A big-box order is a growth signal, not a deposit. You pay your suppliers now. Target or Costco pays you weeks later. Here’s why that gap exists, how the four funding paths compare, and how to size the numbers on a real order.

The takeaways before the detail

• The gap is structural, not a cash-flow mistake. You fund production before the retailer remits, and that timing gap widens with order size.
• PO financing is built for the pre-delivery gap. It funds approved supplier and production costs tied to an upcoming retailer order, then repays when the retailer pays.
• Factoring and lines of credit solve different problems. Factoring advances against invoices you’ve already issued. A line of credit is general-purpose and capped by your existing balance sheet.
• A merchant cash advance is the wrong tool here. Priced on a factor rate rather than an interest rate, it repays through daily or weekly withdrawals that fight against a production timeline.
• The real comparison is against your next dollar of capital. For most growing brands, that dollar is operating cash or equity, which is expensive to spend on inventory execution.

Why a Target or Costco order creates a cash gap

You spend before you collect. To fill a retailer order, you pay suppliers, run production, and ship, all weeks before the retailer’s payment clears.

Costco’s Basic Supplier Agreement, filed with the U.S. Securities and Exchange Commission, states that unless otherwise agreed in writing, Costco is not obligated to pay an undisputed invoice until 30 days after delivery is completed. Thirty days sounds manageable until you remember that delivery itself sits weeks after you paid your supplier.

Target’s terms run longer. According to SPS Commerce’s SupplyPike guidance for Target vendors, Target sets payment terms at the merchandising department level, and a vendor can carry multiple terms across product lines. Their worked example uses “2%, NET, 65,” meaning Target can take a 2% discount if it pays within 65 days of receiving the product.

Stack the full timeline: pay the supplier, produce, ship, wait for receipt, then wait out the net term. The money you fronted can stay out for a full quarter. That’s the window PO financing closes.

The four ways CPG brands fund a big retail order

Four structures show up when a growing brand tries to fund a large order. They aren’t interchangeable, and choosing the wrong one is how a profitable order turns into a liquidity squeeze.

Purchase order financing: funding the order before you ship

PO financing is the only structure on this list designed for the pre-delivery window: the stretch where a Target or Costco order demands cash you don’t yet have. It funds supplier and production costs tied to an upcoming retailer order, then gets repaid when the retailer pays.

A lender reviews the evidence of demand (a formal purchase order, buyer email, buy plan, or producer invoice), your margins, your supplier, and your fulfillment plan, then funds approved production costs directly. Government programs work the same way: the SBA’s Transaction-Based Working Capital Pilot lets small businesses “fund individual projects or orders” and can finance 100% of direct costs.

Repayment is tied to the retailer’s remittance, so the order stays self-liquidating. No permanent liability on the balance sheet.

Invoice factoring: help that arrives after you ship

Factoring advances cash against invoices you’ve already issued to the retailer, typically 70% to 90% of face value, with the balance paid when the retailer settles.

The limitation is timing. Factoring starts only after goods ship and an invoice exists. If your squeeze is getting product made, factoring arrives a step too late. It shortens the wait for retailer payment; it doesn’t fund the work that precedes the invoice.

Many brands pair the two: PO financing to produce and ship, then factoring to compress the net-term wait.

Business line of credit: flexible, until the order is too big

A business line of credit gives you revolving access to cash for general operating needs. For smaller orders that fit under your limit, it can be the cleanest option.

The constraint is the limit itself. A credit line is sized to your existing balance sheet, not to the order in front of you. A breakout Target or Costco order often exceeds what your line will cover, and drawing it down for one production run leaves nothing for payroll, marketing, or the next order.

Merchant cash advance: fast money, wrong shape

A merchant cash advance (MCA) provides a lump sum repaid through a fixed percentage of your future sales, withdrawn daily or weekly. It’s fast and easy to qualify for, which is exactly why it gets reached for under pressure.

An MCA uses a factor rate instead of an interest rate. According to The Wall Street Journal’s explainer on merchant cash advances, the factor rate is a decimal typically between 1.20 and 1.50, so a 1.20 rate means you repay the full advance plus an additional 20%, regardless of how quickly you pay it back. Repayment starts immediately through daily or weekly withdrawals, pulling cash out while you’re still producing and long before the retailer has paid you.

A worked example: a $400,000 Costco order

Take a mid-market food brand that wins a $400,000 Costco order at a 35% gross margin. COGS is $260,000, and the brand needs that cash to pay its co-packer before production begins.

Here’s how the timeline runs on Costco’s net-30 terms:

1. Day 0: The order is placed. The co-packer requires a 50% deposit, $130,000, to schedule the run.
2. Days 1 to 30: Production runs. The remaining $130,000 in COGS comes due on completion.
3. Day 35: Goods ship and delivery is completed.
4. Day 65: Costco remits payment, roughly 30 days after delivery.

The brand fronts $260,000 and waits about 65 days to collect. Now weigh the funding paths:

• Operating cash or equity: A $260,000 check clears the order but empties the account that also funds marketing, hiring, and the next order. For an equity-backed brand, spending investor dollars on a co-packer deposit is among the most expensive capital you can allocate.
• Line of credit: If the brand’s limit is $150,000, it can’t cover the run, and drawing the full line leaves nothing for operations.
• Merchant cash advance: A $260,000 advance at a 1.30 factor rate obligates $338,000 in repayment. Daily withdrawals begin well before Costco’s Day-65 payment.
• PO financing: A PO lender funds approved production costs against the order, then gets repaid from Costco’s remittance. The order pays for itself.

PO financing isn’t free. But the honest comparison isn’t against your cheapest existing facility. It’s against the next dollar you would otherwise spend, which for most growing brands is cash or equity too valuable to sink into a co-packer deposit.

FAQs

What is purchase order financing for CPG brands?

PO financing funds supplier and production costs tied to an upcoming retailer order, then gets repaid when the retailer pays. Approval can be based on a formal PO, a buyer email, a buy plan, or a producer invoice. For CPG brands supplying big-box retailers, it closes the gap between paying for production and receiving the retailer’s remittance.

Purchase order financing vs factoring: which do I need?

PO financing works before you ship; factoring works after. You need PO financing when the squeeze is producing the goods, and factoring when you’re waiting on invoices you’ve already issued. Many brands use both on the same order.

How do I fund a Target order without giving up equity?

Match the funding structure to the order rather than writing a check from operating cash or investor funds. PO financing covers approved production costs and repays from Target’s payment, preserving your equity for marketing and hiring. With Target terms running to net 65 or longer, order-tied financing keeps that capital working instead of sitting in inventory.

Is a merchant cash advance a good way to fund a retail order?

Rarely. An MCA is priced on a factor rate, commonly 1.20 to 1.50, and repaid through daily or weekly withdrawals that begin before the retailer pays you. That pulls cash out during production, the exact moment a retail supplier can least afford it. PO financing, repaid from the retailer’s remittance, fits the cash cycle far better.

Does Costco or Target pay suppliers faster?

Costco’s filed supplier agreement sets payment at 30 days after delivery. Target’s terms are set by department and commonly run longer, with published examples at net 65. In both cases, the clock starts at delivery, weeks after you paid your supplier.

Related reading

• Purchase order financing for CPG brands: how PO financing works across the retail order cycle.
• PO vs. inventory vs. ABL vs. AR financing: a deeper structural comparison of the main working-capital tools.
• Retailer payment terms data for 2026: how Costco, Target, and Walmart terms shape the supplier cash cycle.

Fund the order, keep your cash

A Target or Costco order should grow the business, not empty its accounts. The retailer’s payment terms guarantee a gap between production and remittance. PO financing closes that gap; factoring, credit lines, and cash advances each fit a different problem or a different moment.

Bridge is the direct lender for retail production funding, covering approved order costs so you can produce, ship, and get paid without spending equity on inventory. If you have an upcoming Target or Costco order, request financing and we’ll size the structure to the order.