Purchase Order Funding

Your guide to purchase order funding and finance, from requirements to costs - it's all here.

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What's the purchase order amount?

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Speed of Funding

Within Hours
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Interest Rate

Starting at 15%
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Finance amounts

Up to R5M
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Finance amounts

From R10k to R300M
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From 3% to 8% of PO Amount
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Speed of Funding

Days to Weeks

The pros and cons of purchase order funding

Here are some details which will help you decide whether a invoice factoring is the best bet for you.


  • Helps to grow revenue
  • Available to newer businesses
  • Risk is largely calculated on ability to deliver on PO, and the payer.


  • Minimum gross margin on the deal is required
  • Some lenders require a joint bank account setup to ensure payment on delivery.
Interested in pricing?
Use our purchase order funding calculator to get an estimate on finance pricing

Fair and transparent fees

No referral fee

FundingHub does not charge you anything for an application - we're free to use, forever.

Automatic matching

Depending on the type of purchase order, the amount required and your business - we'll find you the best match(es) automatically.

Transparent pricing

Lenders will make the cost of finance clear up-front so you know exactly how much it's going to cost, and you can work that into your planning.

Purchase order funding calculator

Use this calculator to get pricing estimates for your next purchase order finance deal

What is Purchase Order Funding?

Purchase order finance bridges the gap between order and payment and has the advantage of being faster and easier to obtain than a traditional bank loan. A purchase order loan is based on the creditworthiness of your buyer (customer) and your business.

  • Is designed specifically to help wholesalers and distributors who resell products to commercial customers
  • Is used by companies who need funds to pay suppliers
  • Helps companies grow past their financial limitations

Businesses in South Africa often face problems when they try to secure large orders from new customers. Competing for new business is a difficult process in itself since customers are constantly looking for the lowest price. Another challenge is getting the capital to buy supplies or products to deliver on the new orders.

Your SME (Small to Medium Enterprise) may be in a position where it is not able to fulfil a customer’s order because it does not have the materials in stock or the cash to acquire them. When this happens, the business risks losing both the order and the customer. That’s where purchase order finance can help.  

Purchase order funding (otherwise known as Tender Finance) in South Africa has become a popular way to finance a company that has received a large purchase order from a customer. This is one step before the invoice is generated.

What is a Purchase Order?  

A purchase order (also known as a PO) is a document that is used to record the goods or services that a company wants to buy and the price that it will pay for the goods. This official document is used to keep track of the purchasing process.  

A purchase order is often used when one company wants to buy goods from another company. The buyer will send a purchase order to the seller and ask them to provide all of the details about what they want and how much they are willing to pay for it. Once this information has been received, the seller can then decide whether or not they want to do business with them.

It's legally binding

When an organisation accepts a PO, it becomes a legally binding contract.

They help companies grow  

If you feel you are facing financial limitations, then Purchase Order Funding can help you get funds to pay suppliers. This business loan is designed specifically to help wholesalers and distributors who resell products to commercial customers.

Alternative Lenders at your call

A lot of SMEs don’t have a long-standing trading history or capital to procure goods on behalf of their customer. The need for tender financing arose when there was an obvious gap with financial assistance for small businesses.

These SMEs were unable to fulfil the purchase orders that were awarded to them and thus needed business funding. Alternative lenders look at the purchase order and credit history.  

Do you qualify?

Through FundingHub, you are likely to qualify for purchase order finance if you meet the following criteria:

  • Six months trading history,
  • An average of R40k+ revenue per month,
  • A valid purchase order from a large company, corporate, or from the SA government,
  • It's a bonus if you have worked with that client before.

* Figures are for example purposes only, and may vary from business to business.

What Can You Use Purchase Order Funding for?

This loan is a bit more specific when it comes to its use.

The business loan is granted on the fact that a customer has submitted a purchase order.

Purchase Order Types

There are two different types of purchase orders:  

  • Supply and delivery of goods – goods include: electricity, gas, wholesale, printing etc. For these types of purchase orders, the level of experience needed by the borrower will be determined by the lender, in some cases very little experience is required by the lender for the execution of the purchase order.  
  • Supply of services -  services include; construction, installation, manufacturing, facilitation and labour requirements – for this purchase order experience is required, especially in construction, installation and manufacturing.

Remember: Purchase Order Funding is granted because of a purchase order, so you need to prove that the purchase is legally binding from the customer’s side. Meaning they are obligated to pay the invoice once the purchase order has been fulfilled.  

How does Purchase Order Funding work?

PO funding has two main features:

  • A solid purchase order deal – either from the government or a corporate ,
  • Loan approval is based on a combination of the validity of the purchase order and the borrower's ability to deliver on the purchase order.

Step 1: Look for Finance

Generally, when you have a valid purchase order from a client, you will use that document to look for finance.

Using a comparison service like FundingHub is a great way to do this, because you get multiple offers in one place, and you only have to apply once.

Step 2: Use Finance for Delivery/Supply of Goods

Once you've got the finance you need, you'll put that money to work to deliver on the purchase order.

This is where your skills and expertise kick in!

Step 3: Finalize Delivery and Get Paid

Once you've finished your part of the contract, you should get an acceptance from the customer that the goods or services have been successfully delivered.

They will then pay you directly.

Step 4: Pay Back the Lender

Sometimes this might happen automatically, but once you have been paid, you now have to pay back the lender the financed amount, plus any fee's.

Step 5: Use the Profits to Grow Your Business!

Re-invest the profit you just made from the purchase order and continue to grow and thrive!

How much does Purchase Order Funding Cost?

The fee's in PO's are relatively simple.

Because the contracts are for fixed periods, the lender will quote you a fixed fee for the finance.

From that, you'll know exactly how much you need to account for upfront.

A typical purchase order finance deal will cost from around 4% of the purchase order amount to 6% of the purchase order amount.

This will vary from lender to lender.

A typical purchase order loan example:

A business loans has won a contract to build a road for the Department of Transport. The value of the contract is R20M.

The business approaches a financer with their valid contract document. They need R10M finance to buy raw materials to deliver on the 6-month contract.

The lender agrees to finance the R10M required, for a fee of 6% of the finance amount. The lender pays the funds directly to the supplier who you are buying raw materials from.

Finance Required
Cost of Finance
Gross Profit
R10 000 000
R60 000
R9 940 000

Depending on whether the financer requires that they are listed as a beneficiary of the contract, once delivery is accepted by the DoT, the DoT pays you/the lender the full R20M.
The lender will then repay you the balance of R9 940 000 after they have taken their fee of R60 000.

* Figures are for example purposes only, and may vary for your business and application.

How does the Purchase Order Funding Application Process Work?

Our PO funding application process only takes a few minutes to complete, and we want to make sure we get the right information so you can get the right offer for your needs.
Here's how it works:


Step 1: Apply through FundingHub

One application form will mean you find purchase order finance offers from over 8 different lenders.

It's fast, free, and fully online.


Step 2: Add Information and Documents

The more information we have on the purchase order, and your ability to execute on it, the better.


Step 3: View Loan Offers

We will present you with a list of all your purchase order finance options and offers. This takes seconds to fetch, and the list will be continually updated as you add more information to your profile.


Step 4: Choose an Offer

All the specifics around, pricing, fee's, speed of funds and the different lenders is laid out for you. If you have questions, we've got an independent analyst who can help you choose the right offer. Just give us a call.


Step 5: Finalise Application with Lender

With your permission, your details will be shared with the lender who will disburse the loan to you. They'll collect your bank details, approve your offer and pay you out. We'll be here if you need any independent advice along the way.


Bonus: We're Here all the Way Through

FundingHub has got business finance consultants which you can call and ask questions from throughout your application. There are no queries or concerns that are too much. Just give us a ring.

Check your Purchase Order Finance Options

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Start now. Get capital in 48 hours.

By answering a 5 minute set of questions, you'll be able to fetch a full list of invoice finance offers.

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Applications are free, and won't affect your credit score.