What Is Purchase Order Financing?
Purchase order financing is finance linked to the supplier costs of fulfilling a confirmed customer order. The business has secured work, but it needs to obtain goods or materials before the customer pays. The funding question is how to cover that specific gap.
A purchase order gives the enquiry a commercial starting point: a named buyer, a requirement, quantities, prices and delivery terms. It does not mean finance has already been approved. The opportunity and the proposed arrangement still need to be considered on their own details.
Have an awarded government or municipal tender-linked order? Our Purchase Order Funding Solutions assess the supplier costs needed to fulfil it. The actual deal value must be at least R250,000. Prepare your awarded order, CSD and company information, and matching supplier quotations before starting the four-step application.
Keep the Main Roles Clear
| Role | What it means |
|---|---|
| Buyer | The customer that has placed the order and expects the agreed delivery. |
| Applicant | Your business, which holds the order and is responsible for fulfilling it. |
| Supplier | The business providing the goods or materials needed for the order. |
| Funding provider | The provider considering finance under the terms of a particular arrangement. |
Fund The People offers our own Purchase Order Funding Solutions, with applications assessed by our team. Fund The People funds only purchase orders and completed, accepted, unpaid invoices tied to government and municipal tenders. Private corporate orders and invoices are not eligible. Our published Funding Solutions range is R250,000–R8,000,000+, with funding approval within 48 hours for complete qualifying applications. Approval and payment release are separate stages. The minimum actual deal value is R250,000; the funding amount is assessed separately and submission does not guarantee approval. Fund The People does not charge assessment fees. Under our Purchase Order Funding Solutions, approved payments are made to suppliers. Keep that payment route separate from the later payment your customer owes for the work.
Order Value, Supplier Cost and Funding Amount Are Different
The order value is the selling price agreed with your customer. The supplier quotation sets out the cost of obtaining what you need. The funding amount is the amount considered and approved under the particular arrangement. These figures should appear separately in your costing.
For a simple illustration, assume an order value of R650,000, supplier costs of R430,000 and other delivery costs of R45,000. That leaves R175,000 before finance charges, business overheads and tax. These are illustrative figures, not a Fund The People quote or client result. The remaining amount is not final profit.
If the supplier price changes while your customer price stays the same, the amount left for the business changes too. Check quotation validity and delivery charges before relying on the margin.
How an Enquiry Develops
- Start with the confirmed order. Check the buyer, company details, specifications and any written amendments.
- Connect it to the supplier quotation. Make sure the items, quantities and delivery requirements match.
- Prepare the requested information. Follow the current document checklist and explain the supplier cost you need to cover.
- Review the proposed arrangement. Understand the amount, full cost, payment destination and your business’s obligations before proceeding.
- Keep fulfilment and payment records. Track delivery, invoicing and settlement against the commercial documents and agreement.
When This Route May Be Relevant
A suitable arrangement may help a business address supplier costs on an order it has won. Its usefulness depends on whether the order fits the provider’s criteria and whether the costs and responsibilities work for the business. The company still needs to manage the delivery and understand any expenses the arrangement does not cover.
Our Purchase Order Funding Solutions enquiry pathway is for CSD-registered South African companies with qualifying government or municipal opportunities from R250,000. Read the current purchase order funding requirements before preparing the submission.
To connect these financing terms to choosing a provider, read our purchase order funding company guide. Use its checklist to review buyer eligibility, supplier payments, charges and the evidence behind a provider’s offer.
Already Completed the Work?
An eligible unpaid invoice for completed public-sector work belongs to a different stage. Our Invoice Discounting Solutions address that payment gap; approved payments are made to the applicant.
For supplier costs on a confirmed order, explore our Purchase Order Funding Solutions, prepare the documents needed and start your application.