Costco buys few items in very large quantities and often sells them before it pays. How a small brand pays for the run, carries the wait, and lets Costco's payment settle both.
Last edited 5 min read
60% of a Costco order's production cost is what purchase order financing can pay your co-packer before you have the cash for it. Most small brands finance a large Costco order in two halves: purchase order financing for production, then invoice factoring for the wait after the pallets ship, with Costco's payment settling both. At Spring that costs 12% to 36% a year, and the first funding waits on Costco acknowledging a Notice of Assignment.
This post walks through why a Costco order strains a small brand's cash, the ways to fund it, and one order worked through from purchase order to payment. We sell two of the options, so check our work. It is not legal or financial advice.
Why is a big Costco order hard to fund for a small brand?
Because Costco buys few items in very large quantities, and you pay for the goods long before Costco pays you.
Costco carries fewer than 4,000 active items per warehouse and sells them off pallets holding large quantities, across 629 U.S. warehouses at the end of its 2025 fiscal year.1 An item that wins a spot moves in volume, so a single Costco order can be larger than everything else a young brand sells in a quarter. Costco buys most of its merchandise directly from suppliers and routes it to its depots or straight to its warehouses, so the order has to be made, packed and delivered before it turns into an invoice.
Costco's own annual report describes the other side: "We often sell inventory before we are required to pay for it."1 That is good business for Costco. For you, it means carrying the ingredients, the packaging, the co-packer's run and the freight until Costco pays on the terms in your vendor agreement.
What are the ways to finance a Costco order?
Only purchase order financing and consignment funding pay for production; factoring covers the wait after shipping, and the rest are general-purpose money.
| Question | Pays your co-packer before you ship? | Who repays it |
|---|---|---|
| Purchase order financing | YesA share of the cost of goods, paid to your supplier against the signed order | Costco's paymentThe invoice it pays settles the funding |
| Invoice factoring | NoIt starts when you ship and invoice Costco | Costco's paymentPaid to the account named in the notice |
| Consignment inventory funding | YesIt funds the inventory, not the order | YouAs the stock sells, through any channel |
| Revenue-based financing | Only from cash already in handSized on your past sales | YouA share of revenue, often every week |
| Bank line or SBA-backed financing | Yes, if it is already in placeWeeks to months to set up | YouMonthly, usually with a personal guarantee |
Purchase order financing is built for this order: the funder looks at the signed order and at Costco behind it more than at your balance sheet. Invoice factoring takes over once you ship. Consignment funding from companies such as Kickfurther pays for inventory and is repaid by you as it sells; we compared the two in consignment inventory funding vs PO financing. Equity also works, but selling part of the company to pay for one order means paying forever for money you needed for a season.
How does purchase order financing work on a Costco order?
Spring pays your supplier against the signed order, advances on the invoice when you ship, and Costco's payment settles both.
Take an illustrative brand with a $300,000 Costco purchase order that costs $180,000 to make, counting ingredients, packaging, the co-packer's run and freight to Costco's depots.
- The order arrives. The brand sends the purchase order to Spring, or Spring reads it from the retailer portal or EDI.
- The supplier is paid. Spring pays up to 60% of the cost, $108,000, directly to the co-packer and packaging supplier. The brand covers the other $72,000.
- The order ships. The pallets go to Costco's depots, and the brand invoices Costco for $300,000.
- The invoice is advanced. Invoice factoring tops the funding up to the advance rate for Costco, $240,000 in total at an illustrative 80%, so $132,000 more reaches the brand.
- Costco pays. Costco pays the $300,000 invoice to the account named in the Notice of Assignment. Spring keeps the $240,000 and its fee, and releases the rest to the brand.
The fee runs only on the days the money is out. If the first $108,000 is out for 75 days and the top-up for 30, both illustrative, the fee is about $4,000 at 12% a year and about $11,900 at 36%. Costco's real payment date comes from your vendor agreement, and the fee follows it.
What does Costco see when I use a funder?
A Notice of Assignment: a letter asking Costco's accounts payable team to pay your invoices to an account Spring holds for you.
Spring needs one for purchase order financing, invoice factoring and demand plan financing. Costco will know you have a funding partner, and your first funding waits until it acknowledges the notice, which usually takes days and occasionally a couple of weeks. It does not change the price Costco pays, the terms, or the product on the shelf. What a NOA is and exactly what it changes, with Costco as the worked example.
What if my brand is too small for purchase order financing?
Spring's purchase order financing needs at least $1 million in yearly revenue; below that, fund production another way and factor the Costco invoice.
Invoice factoring has no such floor, because the advance rests on Costco paying, not on how big you are. A first Costco order can be made from savings, an equity round or consignment funding, then factored the day it ships, which frees the cash for the next run. If you need a smaller amount fast with no retailer involved, Bridge Funding is the one Spring product that needs no Notice of Assignment.
When is something else the better choice?
When the need is not one order but the whole business.
- You already have a bank line with room on it. Use it first; it is usually the cheapest money a business can get.
- The money is for the brand, not an order. A new line, a team or years of growth ahead of revenue is what equity is for.
- Costco is a small share of your sales. If most of your revenue is online, funding sized on those sales may fit better: see ecommerce funding vs invoice factoring.
Frequently asked questions
How do I finance a large Costco order as a small brand?
Most small brands split it in two. Purchase order financing pays the co-packer and suppliers against the signed Costco purchase order, so production can start. Invoice factoring then advances the Costco invoice once the pallets ship, and Costco's payment settles both. Spring offers both at 12% to 36% a year.
When does Costco pay its suppliers?
On the terms in your vendor agreement. Costco's annual report says it often sells inventory before it is required to pay for it, so plan to carry the whole cost of the order until the payment date your agreement sets. Factoring the invoice shortens that wait to days after you ship.
Can I get purchase order financing for a Costco order without a long track record?
Often, yes. A purchase order funder relies on the signed order and on Costco's payment more than on your history. Spring's purchase order financing needs a US business with at least $1 million in yearly revenue and a supplier Spring can pay. Below that, invoice factoring works on the Costco invoice once you ship.
Will Costco know I am using a funder?
Yes. Spring and most factors send Costco a Notice of Assignment asking it to pay your invoices to an account the funder holds for you. Retailers process these routinely, and it does not change your price or terms. What a NOA is.
Is Kickfurther or purchase order financing better for a Costco order?
It depends on who you want to repay. Kickfurther's consignment funding pays for inventory and you repay it as the stock sells, through any channel. Purchase order financing pays your supplier against the Costco order, and Costco's payment settles it. The two compared on one order.
How much does it cost to finance a Costco order with Spring?
12% to 36% a year, charged only for the days the money is out. On an illustrative $300,000 Costco order, that is about $4,000 to $11,900 in total, depending on your rate and when Costco pays.
How fast can I get funded for a Costco order?
Days, once the order and Costco are verified and Costco has acknowledged the Notice of Assignment, which usually takes days and occasionally a couple of weeks. Later orders fund without a new notice.
If you have a Costco order to fill, get started or talk to the team.
1 Costco Wholesale Corporation, Form 10-K for the fiscal year ended August 31, 2025, Item 1, read October 2026.
