Applying for Purchase Order Financing

Purchase Order (PO) financing can drive some serious growth in your business and free up additional cash flow. Businesses in South Africa are using purchase order financing to flourish and grow exponentially faster than their competition. It’s a surefire way to accelerate your business in the right direction.

It’s important to understand the process of applying for PO funding to ensure that your application will be a success and this is where most businesses fall flat.

In this article, we’ll go over the process, the key details your application needs, and some tips for a successful application. Hopefully this will prepare you for a successful purchase order financing application.

PO Funding Application Process

Before even starting your PO funding application, you need to make sure to have all the required documents in order. Remember, having everything in order will make it easier for the financial institution to evaluate your application and get it approved. Here are some of the common documents you should include:

• Purchase order – a detailed copy of the purchase order from your customer, including order number, quantities, prices, payment terms, and delivery dates.
• Specification – Request For Quotation (RFQ) page displaying detailed description of the product or service required.
• Supplier Quotation– an invoice from your supplier outlining the cost of goods or services needed to fulfill the order.
• Company registration Documents – The registration document helps verify the identity of the business and its key stakeholders. This reduces the risk of fraud and ensures that the funding goes to the rightful entity.

You’ll also need to fill out the PO funding application form. Each financial institution will require unique details and documents based on their regulations. We’ll dive deeper into those details in the next section.

Key Information for Your Application

Along with your supporting documents, you’ll need to send in an application form with essential details about the purchase order and your business. The application may ask for some of the following details:

• Delivery Date
• Delivery location
• PO extension approval email from the PO issuer for cases where an order is delayed. Extensions should also consider the lead times provided by the chosen supplier.
• Sample and specification approval emails from the PO issuer for the goods that need to be delivered.
• Payment terms from the PO Issuer.

While the application and supporting details are often enough to get the process started, it’s always recommended to give the financial institution as much information as you can. This will ensure that the process goes much faster and smoother. 

The Evaluation Process

Once you’ve gathered all the required documents, filled out the application form, and sent it to the financial institution, it’s time for the evaluation process. 

The financial institution will review your application and all the documents you have sent through. During this process, the financial institution will measure up your application against their criteria for purchase or funding.

Why was my PO funding application rejected?

It’s not uncommon for PO funding applications to be rejected. The criteria for an approved application can be strict, which makes it difficult for most businesses to have their application approved.

Here are some of the common reasons why your application may have been rejected:

• Poor profit margins
• Fraud Concerns: Fake PO’s or Suspicion of fraudulent activity or errors in the purchase order.
• High-risk industry.
• Purchase Orders Issued by non-established companies or lesser-known entities.
• Industries or commodities not part of the criteria by the funding company.

Tips for a Successful Application

Having your PO funding application rejected is not only deflating, but it can also set you back. It’s important to ensure that you’ll have a successful application to keep your operations running smoothly. Luckily, there are some tips and tricks you can follow to increase your chances of your application being approved.

Ensure that you have all your documents and provide as many details as you can. We’ve covered a lot of ground on the documents and the application process in this article, but the importance of this factor cannot be overstated. Many applications are rejected because a business has not provided the required documents.

Conclusion

Applying for purchase order funding can be straightforward if you pay close attention to detail. It’s essential to ensure that you have all the necessary documents, that your information is current, and that the application form is completed accurately. Although this process may require time and effort, it is crucial to get it right for a smooth, efficient, and successful PO funding application.

Click here to understand the criteria for purchase order funding.