This matters most for small suppliers who land a large order but don't have the upfront cash to buy stock or materials to fulfil it. Rather than turning down the order or draining all available cash, PO funding bridges the gap between winning the order and getting paid for it.
Source: Corporate Finance Institute
Frequently Asked Questions
Is purchase order funding the same as a bank loan?
No — it's typically tied specifically to a confirmed order rather than the business's general creditworthiness, which can make it accessible to businesses that wouldn't otherwise qualify for traditional financing.
Who typically uses purchase order funding?
It's most common among suppliers and distributors who receive large orders relative to their available cash, particularly when a big customer has long payment terms.
How do I know if PO funding makes sense for my business?
The Purchase Order Funding Toolkit – South African Edition helps South African businesses work through the real costs and trade-offs before applying for funding.