As a distributor, you may run into cash flow problems if vendors demand payments within 10 days, but your customers don’t pay for 30 days or more after being invoiced. This slows growth because you have to wait until customer payments are received before new orders with vendors can be made. P.O. financing can help speed things up, allowing you to receive payments sooner and turn around to make new orders with vendors.
To get an idea of what lenders look for in extending P.O. financing, here’s a short article from a lender’s perspective: https://cfa.com/eWeb/docs/tsl_archives_pdf/mar04_pg020.pdf.