Guide · Buying, expanding, opening
You landed a big-box account and they pay net-90 from receipt. What funds three months of product before the first check?
By Alex Makowski Published
Model the true gap first: net-90 from receipt, plus freight time, plus the retailer's payment cycle, is often 100 to 120 days from the day you paid your own supplier. Then fund it as a cycle, not an emergency — a business line of credit sized to a full order cycle is the right shape; a working capital loan on your existing deposits, with the purchase order attached, is the faster first bridge. Supplier terms on your side and early-payment programs on theirs shrink what you borrow.
In this guide
- 01The gap is longer than the term
- 02Fund the first order, then fund the cycle
- 03Shrink what you borrow
- 04The trap
- Won't affect your credit
- Free, no obligation
- Up to $500K
01
The gap is longer than the term
Large retailers pay small suppliers on net-60 to net-90, some on net-120, depending on category. The clock starts when they receive the goods, not when you ship them, so a truck that leaves in January and lands in mid-February starts a ninety-day count that pays in May. Add the retailer's payment run and the deductions and chargebacks that come off the remittance, and a supplier is commonly out of pocket for a third of a year on every order.
Suppliers describe it accurately: the retailer is running on their cash. There is no leverage to change the terms and no real choice about taking the account. There is a choice about how to fund it.
02
Fund the first order, then fund the cycle
The first order is a bridge: a working capital loan or a cash advance on your existing deposits, sized to the production cost of the order and funded in one to three business days, with the purchase order and the retailer's terms attached. An underwriter reading a dated PO from a national retailer next to your statements is reading a receivable with a very reliable payer at the end of it, and offers reflect that.
The second and every order after is a cycle, and a cycle wants a business line of credit: drawn when you pay your supplier, repaid when the retailer remits, costing interest only on the days it is drawn. It is harder to qualify for and slower to set up; apply for it after the first remittance lands and the statements show the account is real.
What your deposits support
03
Shrink what you borrow
Your own supplier's terms are the cheapest financing in the chain; net-30 on your raw materials is thirty days of the gap you do not fund. Most large retailers run an early-payment or supply-chain finance program that pays inside a couple of weeks for a discount — ask the buyer for the program's terms and compare its cost against the line. And price the wait into the unit cost from the first negotiation, because the retailer's terms are a cost of goods, not a surprise.
04
The trap
A big-box account that becomes most of your revenue is a customer that decides your payroll date, and the deductions on the remittance — compliance chargebacks, shortages, promotional allowances — are real money that the PO did not mention. Keep the account under half of revenue if you can, read the vendor manual before the first shipment, and fund the cycle with a product that can absorb a remittance that comes in short.
Written by
Alex Makowski, Owner
Alex Makowski owns and runs Business Loans for America and has been placing funding for U.S. small businesses since 2021. Businesses he has worked with have secured $50M+ in financing across 1,200+ placements. He writes and reviews every guide on this site.
FAQ
Related questions.
- Will a funder count a purchase order from a big retailer as collateral?
- Not as collateral in the products here; deposit-based funding reads your statements and treats the PO as the reason. Purchase-order financiers and factors do lend against the retailer's paper directly, at their own prices. We do not place those.
- Is the retailer's early-payment program cheaper than a loan?
- Often, for the first order or two, because the discount is priced against a very safe receivable. Over a year of orders it can cost more than a line of credit. Get the program's rate and compare it in dollars against the line's.
- What if the retailer deducts and the remittance comes in short?
- It will, on most orders. Dispute what is wrong through the vendor portal, and size the funding to net remittances rather than gross invoices so a ten percent deduction does not become a missed payment.
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Sources
- U.S. Small Business Administration — LoansFederal loan programmes, eligibility and what the SBA does and does not guarantee.
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