What is a Purchase Order Funding?

Starting and owning your own business is probably one of the toughest and most challenging decisions a person could make. It is anything but easy. One of the biggest challenges is trying to secure purchase order funding for supplies when big orders come rolling in. It is critical that you have the finance and support to keep your client happy.

Small business and medium enterprises in South Africa often run into financial challenges when trying to secure large orders from new customers. Competing and securing new customers is a difficult task in itself, as customers are continuously on the lookout for suppliers who can offer them the best product at the lowest price. When a deal has been closed it then becomes a worry of how to obtain the funds to purchase the products to deliver the service that is being offered.

Your business may be in a position if you are not able to deliver on your client orders.  Depleted cash flow will prevent you from fulfilling the purchase order. When this happens, the business runs the risk of losing both the order and the customer. A timely Biz Funding loan can offer much-needed assistance. Getting you the capital for a purchase order is exactly what we do. Funding cash flow and working capital is our single-minded focus.

Funding is often key to ensure you get the finance for purchase orders. It is a popular way for management to acquire the necessary company credit. Government purchase order financing is the most popular request, yet it can also include a contract from a large corporation or municipal department to supply a service or deliver a product.

What is purchase order funding?

Purchase Order Financing is a loan awarded based on the purchase order which provide will provide your business with working capital to purchase materials to deliver a product or service to keep your customers happy. This enables the business to fulfill customer orders without the pressure of obtaining added working capital.

Advantages of Purchase Order Funding

• It is easier to get a purchase order loan than a traditional bank loan

• Easy and quick set up

• Available to start-up to small companies

How does it work?

You have received a large purchase order from a customer. Your supplier requires an upfront payment, but the customer invoice won’t be paid for 90 days after the order is delivered. This creates a classic working capital problem. Without the money, you could lose the order and possibly worse cause reputational damage. To secure funds, many companies will be forced to apply for traditional finance but are often turned away because of bank requirements as banks base their lending on the company’s past performance.

With a guaranteed purchase order, your suppliers are paid directly via a letter of credit or cash. Your business fulfills the order; with profit being disseminated after the order is received.

How is it different from a bank loan?

All banks are bound by regulations. Loan requirements CAN include collateral and 3 years of company financials. Banks also require CREDIT CHECKS AND PROOF that the business can take on and deliver on a large increase in business. LOANS ARE ALSO PAID BACK MONTHLY 

A P.O. funding company is an alternative lender. Their focus is on authenticating the quality of the transaction by looking at END USERS AND SUPPLIERS.

They also review factors such as:

• Sufficient gross profit margin

• Production can be sped up/down to meet demand

• The product appeals to a broad audience

With funding for purchase orders, a business can increase or decrease growth capital according to their needs.

Where to get Purchase Order Funding?

Whether you are looking for P.O finance in Pretoria or Durban, there are a variety of institutions that offer this service throughout South Africa. Some traditional banks such as FNB do have products that assist small businesses with purchase order finance. There are also many other smaller geographically targeted financial institutions that can help. Purchase order funding is also available through government agencies such as SEFA, and GEP, Government Enterprise Propeller. Entrepreneurs and small businesses can apply for funding from these respective institutions and agencies in a few simple steps. Once approved, funds are made available and paid over to your supplier and your business can continue to meet your client expectations and grow from strength to strength.

At BizFunding, we are committed to getting small and medium-sized business owners the funding solution they need to effectively run and grow their business. We have a dedicated and highly skilled management team to help your company get the best possible finance to fund all your P.O. and Tender finance needs.

When BizFunding was founded we could see that businesses were not being given business funding to grow, business finance is not only about giving business money.

We work as a business partner to provide you with a solution that makes funding safe, simple, and convenient. Our management team has over the years have devised creative funding solutions that offer flexible terms.

Our primary focus is to help you navigate through your millstones and strengthen your business for future opportunities.

 

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It Only Takes 3 steps to get approved

Apply Online

Simply Apply Online and send us your Purchase Order with specification of RFQ as well as the suppliers quotation!

Verification

Once we have validated the documents and given you a proposal we will request the following:

  • Copy of all directors ID
  • Proof of residential address of all directors
  • Proof of business address
  • 3 TO 6 Months bank statements
  • CK Document
  • Tax Clearance Certificate
  • Registered on CSD
  • BEE Certificate 

Verification

Once we have validated the documents and given you a proposal we will request the following:

Copy of all directors ID

Proof of residential address of all directors

Proof of business address

3 TO 6 Months bank statements

CK Document

Tax Clearance Certificate

Registered on CSD

BEE Certificate 

Funds Transfer

Once we have validated your documents and you accept our proposal, we can start funding your transaction.

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