Benefits of Purchase Order (PO) Funding In South Africa

South African businesses are fighting on all fronts. If it’s not the economy tanking, it’s load shedding causing headaches. Then there’s also the unpredictable political situation, increased expenses, and a lack of people spending their hard-earned money.

Thousands of businesses around the country have already closed their doors simply because they cannot get by anymore. It’s all about a lack of funding and being unable to generate the money needed to push through tough times.

PO funding offers a solution to these challenges by providing vital financial support to SMEs in South Africa. In this article, we’ll explore the benefits of PO funding further to give you the solution you might be looking for.

WHAT IS PURCHASE ORDER FUNDING?

PO funding is a financial solution used by businesses to obtain funding based on their purchase orders. This type of financing is especially beneficial for SMEs that might lack sufficient working capital to fulfill their orders.

Here’s a quick overview of how purchase order funding works:

1. Funding application: You submit a request for PO funding from Beyond JV.
2. Evaluation: We will evaluate your application based on the PO profit margins, scope of work, Supplier lead times and end user’s payment terms.
3. Funding approval: Once approved, we will present you with an offer, and the percentage provided will be based on the capital required.
4. Order fulfillment: After verifying the suppliers, we will make an EFT payment to them. We will coordinate all delivery logistics with the supplier to ensure timely and efficient fulfillment of your order.
5. Repayment: After your PO issuer makes payment for the order, Beyond JV will deduct the funded amount and any related interest as per the agreed terms. The remaining balance will be payable to your business, with no hidden fees.

BENEFITS OF PURCHASE ORDER FUNDING

Improved Cash Flow

The primary advantage of PO funding is its ability to significantly enhance your cash flow. Additionally, it usually comes with more flexible requirements than conventional bank loans, making it a compelling choice for many businesses.

Furthermore, any excess cash that remains after your expenses can be invested to grow your business further. For example, you could invest some funds into market research, additional marketing, or expanding your line of products.

Accelerated Business Growth

Another great benefit to PO funding is that it can fuel your business growth. With access to funding, you can take on larger orders and grow your customer base without waiting for payments from previous orders.

Timely payments to suppliers can strengthen relationships, potentially leading to better terms or discounts, which can improve profit margins.

With financing in place, you can concentrate on scaling your business rather than worrying about immediate cash flow issues.

Risk Mitigation

Risk is part of business, but with PO funding, you can reduce these risks and run a more stable business. Overall, PO funding provides a safety net that allows companies to fulfill orders without overextending themselves financially, reducing the likelihood of default or operational disruption.

PO funding can be tailored to specific orders, allowing SMEs to only borrow what they need, thus managing financial risk more effectively.

It also allows your business to protect its cash reserves. This is important, especially considering the unpredictable era we’re living in. Think back to the Covid pandemic, the recent IT outage, or the stock markets plummeting out of nowhere. Having emergency funds and reserve capital ready for unexpected expenses is crucial.

FINAL THOUGHTS

PO funding is crucial for South African SMEs because it provides much-needed liquidity and helps bridge the gap between order fulfillment and payment collection. In an unstable and unpredictable economy, businesses require substantial capital access to ensure sustainability while pursuing growth. In many cases, businesses need access to PO funding just to survive. Whether you’re looking to expand your business, improve relationships with suppliers, or move to a new premises, PO funding is the perfect solution.

Click here to understand the criteria for purchase order funding.