What Is Purchase Order Funding And Why Do I Need It?

Are you selling finished goods to businesses or government organisations but have limited funds available? Then Purchase Order Funding is the solution for you.

Purchase order funding is a service available to organisations that sell finished goods to businesses or government organisations to assist them in being able to provide their goods to their customers, even if they do not have the cash available to purchase the goods needed from their supplier. Purchase order funding is sometimes also referred to as working capital finance.

There are 4 parties involved and it works like this:

✔️ You have a customer asking for a quotation from you.

✔️ You then ask your supplier for a purchase order for goods that will enable you to provide those goods to the customer.

✔️ You now need the funds to pay the supplier.

✔️ You supply both the quotation and the purchase order, to a funder.

✔️ If the funder approves the financing, the supplier will then provide you with a tax invoice, which the funder will pay directly to the supplier.

✔️ The customer will then receive the goods from the supplier.

✔️ You will then invoice your customer which will then pay the funder directly.

✔️ The funder will then subtract the funding as well as their agreed-upon fees, and pay the remaining balance out to you.

Using this method assists you in maintaining good relationships with your customers and increases your reliability and reputation. This is a great way to grow your business without having to go into bank debt.

Keep in mind that if you are a startup, you don’t necessarily have to have a high credit score but the funder will have a look at the creditworthiness of your customer and supplier, and they would need to be well-established. If you have an organisation with high-profit margins, you should qualify easily.

Don’t turn down that great business opportunity — grow beyond financial limitations and apply for purchase funding here.