Purchase order funding

Purchase order funding, often shortened to PO funding, exists for exactly that moment. It is not a loan against your business. It is funding placed against a specific confirmed order, and the question that decides it is who issued that order.

How purchase order funding works

1. You win a confirmed order. A written purchase order from a buyer who can pay — a retailer, a corporate, a mine, a municipality, a government department.
2. We assess the buyer, not just you. The funder is really lending against the organisation that will settle the invoice. A national retailer and a one-year-old private company are priced completely differently.
3. Your supplier is paid directly. On most structures the money never passes through your account — the funder settles your supplier so the stock moves.
4. You deliver and invoice. The delivery is yours to execute. Nobody funds a deal they do not believe you can deliver.
5. Your customer pays, and the facility settles. What is left after the funding cost is your margin.

RFQ funding

Most government buying below the tender threshold does not go out as a tender at all. It goes out as a request for quotation. You quote, you win, and an order or letter of appointment follows. That award is fundable in exactly the same way a purchase order is, and RFQ funding is simply what this is called when the paperwork arrived that way.

The line that matters is not RFQ versus purchase order. It is awarded versus not awarded. Once you hold a written award, we can work with it. While you are still waiting to hear, there is nothing to lend against — and any funder who tells you otherwise is selling you something.

RFQ funding in full — the procurement thresholds, what counts as an award on paper, and why the Central Supplier Database decides whether you ever get invited to quote.

Government purchase orders

A purchase order from a national or provincial department, a municipality, a municipal entity or a state-owned company is often easier to fund than a private one, because the buyer's ability to pay is not in question. What is in question is when.

Most government structures also require a deed of cession — the department agrees to pay the funder directly rather than paying you and trusting you to settle. If the institution will not sign one, the deal usually will not place, whoever you take it to. Worth asking your buyer early rather than at the end.

Purchase order funding or invoice discounting?

People ask for the wrong one often enough that it is worth stating plainly. Purchase order funding happens before you deliver, to pay suppliers. Invoice discounting happens after you have delivered and invoiced, releasing cash against money already owed to you.

Invoice discounting is usually the cheaper of the two, because the risk is smaller — the work is already done. If you have already delivered, ask about invoice discounting first. We would rather place you on the cheaper product and earn less than put you on the dearer one because you asked for it by name.

When purchase order funding does not work

Most sites selling this will not tell you. These are the deals that get declined, and knowing them now saves you handing over six months of bank statements to find out. The full list, with the numbers, is on what has to be true:

• A quote you have not won yet. If you have submitted against an RFQ and are waiting to hear, there is nothing to fund yet — come back the day it is awarded. An awarded RFQ is a different matter entirely: see RFQ funding below.
• Thin margin. Under about 10% gross there is simply not enough in the deal to carry the cost of funding and still leave you a profit. Between 10% and 20% it is placeable but the panel narrows; 20% and up is where most funders are comfortable and more of them will compete for it.
• A buyer nobody can credit-check. If the organisation paying you has no credit history and no balance sheet, the funder has nothing to lend against.
• Services with no goods. Pure labour contracts are hard to fund this way, because there is no supplier invoice and no stock to secure against.
• A delivery you cannot execute. If the order is five times anything you have ever delivered, expect hard questions about capacity. Sometimes the honest answer is to fund part of it.

What it costs

Nobody in this market publishes a real rate card, and the ones who show you a calculator mostly render a zero. Pricing on a purchase order is built from four things, and you can work out roughly where you sit before you speak to anyone.

If the buyer is a government department

Then the question is not whether they will pay but when. National Treasury publishes the numbers every quarter, and in the quarter to September 2025 there were 92,223 invoices sitting unpaid past the thirty-day deadline across the provincial administrations, worth R12.1 billion. Which province you are contracted to changes the picture enormously — Eastern Cape alone accounted for 46,583 of them, while Limpopo had none.

Look up your buyer’s payment record before you price the job. It is public information and almost nobody uses it.

What you need to apply

• The confirmed purchase order, awarded RFQ or letter of appointment
• Your supplier’s quotation or pro-forma invoice
• Six months of business bank statements
• Company registration documents and the director’s ID

If you are missing something, send what you have. We would rather start the conversation than wait for a perfect file.