You’ve just landed a large order from a reliable customer. It’s exactly what your business needs, but there’s a catch: to fulfil it, you must pay your supplier upfront, and your customer won’t pay you until after delivery. Many South African SMEs get stuck at this point, not because the business is weak, but because cash is tied up.
Purchase order funding exists to close that gap.
How purchase order funding works
Purchase order (PO) funding is a short-term financing solution where a funder pays your supplier on your behalf so you can fulfil a confirmed order. Instead of using your own cash or applying for a traditional loan, the order itself becomes the basis for the funding.
- You receive a confirmed purchase order from a creditworthy customer.
- You apply for funding and share the order, supplier quote, and relevant business details.
- The funder assesses the transaction, looking at the order, your customer, and your supplier.
- The supplier is paid, so you can source the goods or materials.
- You deliver the order, and your customer pays according to the agreed terms.
- The funder is repaid from the customer’s payment, and you receive the balance, less the funding costs.
Who is it for?
Purchase order funding often suits businesses that:
- Resell or supply goods, such as wholesalers, distributors, and importers
- Supply larger businesses or government with confirmed orders
- Are growing faster than their cash flow allows
- Don’t have the security or track record a bank loan might require
The benefits
- Take on bigger orders without turning work away
- Protect your own cash for day-to-day expenses
- Funding based on the transaction, not only your balance sheet
- Grow without giving up equity in your business
Things to consider
Purchase order funding works best when margins are healthy, the customer is reliable, and the order is confirmed. Fees apply, so work out the numbers before committing. A good funding partner will explain the costs clearly upfront.
Ready to fulfil that order?
If you have a confirmed purchase order and need the cash to deliver it, PG Asset Finance can help you explore your options. Request a Quote today and let’s see how we can fund your next order.
