Below illustrates one of the working capital solutions we recently provided through Accounts Receivable Financing.
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PROBLEM:
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SOLUTION:
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RESULT:
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Contact SouthStar today to discuss the benefit Accounts Receivable Financing can have on your business.
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AR Financing in Action

When taking on large projects or fulfilling major contracts, businesses often face the challenge of covering upfront costs before receiving payments. Both mobilization funding and purchase order (P/O) financing are valuable solutions that provide businesses with the working capital needed to move projects forward. However, they serve different purposes and are used in various scenarios.
In this blog, we will compare mobilization funding and purchase order financing, breaking down their benefits and differences and determining when each is the right choice for your business.
What is Mobilization Funding?
Mobilization funding is a type of financing designed to cover the upfront costs needed to begin a project. For industries like construction, government contracting, and other service-driven sectors, these initial costs can include things like:
- Purchasing materials
- Transporting equipment and labor to the project site
- Insurance and bonding fees
- Payroll for workers before any invoices are issued
- Setting up project-related logistics
Mobilization funding ensures businesses have the financial resources to get projects off the ground without delays or cash flow interruptions. This funding is typically based on a percentage of the total contract value. Once the project begins and invoices are generated, the funding often transitions into an accounts receivable (A/R) financing facility to maintain working capital throughout the project.
Critical Benefits of Mobilization Funding:
- Covers essential upfront costs needed to start a project
- Provides financial stability while waiting for project payments to come through
- Enables larger contracts by ensuring funds are available for necessary materials and labor
- Keeps projects on schedule, reducing the risk of delays
What is Purchase Order Financing?
On the other hand, purchase order (P/O) financing is a type of funding used to cover the cost of producing goods to fulfill a purchase order. This form of financing is popular in industries where companies need to pay suppliers upfront to deliver products, but they don’t have enough capital.
With purchase order financing, the lender or financing company pays your supplier directly for producing and delivering goods needed to fulfill the purchase order. Once the supplier delivers the goods, the financing company is repaid when the customer pays their invoice.
This type of financing is ideal for businesses that don’t have sufficient cash flow to cover the costs of manufacturing or procuring goods for large orders but want to take advantage of growth opportunities.
Key Benefits of Purchase Order Financing:
- Funds production costs when fulfilling large orders
- Ensures suppliers are paid upfront, eliminating delays in the supply chain
- Helps businesses take on larger orders without cash flow concerns
- Avoids missing out on revenue opportunities due to a lack of capital
Comparing Mobilization Funding and Purchase Order Financing
While mobilization funding and purchase order financing help businesses manage cash flow challenges and take on larger projects, there are distinct differences in how they function and when each applies.
Aspect | Mobilization Funding | Purchase Order Financing |
---|---|---|
Use Case | Primarily used to cover upfront costs related to starting a project (labor, materials, logistics, payroll) | Used to pay suppliers for the production and delivery of goods needed to fulfill a purchase order |
Industry Focus | Common in industries like construction, government contracting, and large-scale services | Common in manufacturing, wholesale, distribution, and product-based businesses |
Funding Timing | Provided before the project begins, allowing companies to set up the project and move resources to the site | Provided when a purchase order is received, allowing companies to pay suppliers upfront for production |
Repayment | Typically converts into an accounts receivable facility once the project begins and invoices are issued | Repaid when the customer pays their invoice after the order is fulfilled |
Project Scope | Best for service-oriented or contract-based projects that require upfront capital to start work | Best for product-based businesses that need to fulfill large customer orders but lack immediate capital |
When to Use Mobilization Funding
Mobilization funding is best for businesses that need working capital before they can start a project. This is especially true for contractors and service-oriented businesses where upfront costs—like materials, labor, and logistics—need to be covered before any work begins. It is particularly beneficial for companies working on government contracts or large-scale construction projects where payment terms can be delayed.
For example, a construction contractor that wins a large government contract but needs to pay for materials and set up the project site could use mobilization funding to cover these costs before the first invoice is even issued. Once work begins, the mobilization funding could transition into an A/R facility to ensure smooth cash flow until the project is completed.
When to Use Purchase Order Financing
Purchase order financing is most suitable for businesses that deal with physical goods and need to pay suppliers to manufacture or deliver products for a specific order. If you’re a manufacturer, distributor, or wholesaler and you receive a large purchase order but don’t have enough capital to pay your suppliers, purchase order financing ensures that you can fulfill the order without straining your cash flow.
For example, a company that receives a $100,000 purchase order for product delivery but lacks the funds to pay its suppliers could use purchase order financing to cover the supplier costs. Once the customer pays their invoice after receiving the goods, the company repays the lender and keeps the profit.
How SouthStar Capital Can Help
At SouthStar Capital, we provide both mobilization funding and purchase order financing solutions tailored to meet your business’s needs. Our mobilization funding can advance up to 10% of the total contract value to cover upfront costs, while our purchase order financing helps you cover supplier costs for large product orders.
We understand that each project or order presents unique financial challenges, and we’re here to provide the working capital you need to take on larger contracts, meet customer demand, and grow your business without financial strain.
Mobilization funding and purchase order financing are both valuable tools that can help businesses overcome cash flow obstacles and take on bigger projects or orders. Understanding the difference between the two ensures you select the right funding option for your specific situation.
If you’re ready to explore how mobilization funding or purchase order financing can support your business, contact SouthStar Capital today. Let us help you secure the financial resources you need to grow with confidence.