Purchase Order Funding can be a powerful tool for SMMEs that win contracts but don’t have the cash flow to deliver. It helps you pay suppliers, fulfil orders on time, and get paid without straining your business finances.
But like any financial solution, using it the right way makes all the difference. Here’s a simple guide to the do’s and don’ts to help you avoid delays, extra costs, and unnecessary stress.
The Do’s of Purchase Order Funding
1. Do make sure your purchase order is legitimate
Funders only finance confirmed and verifiable purchase orders.
Ensure:
- The purchase order is official
- The issuing organisation is legitimate
- The order details are clear and complete
If documents are unclear or inconsistent, approvals can be delayed.
2. Do prepare your documents early
Funding moves faster when your paperwork is ready. Common requirements include:
- Company registration documents
- Director IDs
- Tax clearance
- Supplier quotation
- Signed purchase order
Having everything prepared shows professionalism and speeds up approval.
3. Do work with reliable suppliers
Your funder pays suppliers directly, so supplier credibility matters.
Choose suppliers who:
- Can deliver on time
- Provide clear quotations
- Have verifiable business details
Unreliable suppliers can cause delivery delays and reputational damage.
4. Do understand the costs
Purchase Order Funding is a service, not free money.
Make sure you understand:
- The funding fee
- Payment terms
- What happens if delivery is delayed
Clear expectations help you price your contract correctly and protect your profit.
5. Do communicate openly with your funder
Keep your funder informed about:
- Delivery timelines
- Supplier issues
- Client communication
Transparency builds trust and helps resolve problems quickly.
The Don’ts of Purchase Order Funding
1. Don’t apply without a confirmed purchase order
Quotes, tenders, and unsigned contracts are not enough.
Funders need a confirmed order before releasing funds.
2. Don’t hide important information
Trying to withhold details about:
- Your client
- Your supplier
- Your company status
…can lead to declined applications or cancelled agreements.
Honesty speeds up approvals.
3. Don’t ignore delivery timelines
Late deliveries can:
- Damage your reputation
- Delay client payments
- Increase funding costs
Always plan logistics carefully.
4. Don’t misuse the funds
Purchase Order Funding is meant to:
- Pay suppliers
- Cover order fulfilment costs
It should not be used for unrelated expenses like rent, salaries, or personal costs.
5. Don’t sign contracts you don’t understand
Always read:
- Funding agreements
- Fee structures
- Repayment terms
Ask questions before signing. A good funder will explain everything clearly.
Final Thoughts
Purchase Order Funding can help your business:
- Deliver contracts with confidence
- Protect your cash flow
- Build a strong reputation
- Grow sustainably
When used correctly, it turns confirmed orders into real business opportunities.
The key is simple: be prepared, be transparent, and work with trusted partners.
If you’re ready to move forward, take time to understand how purchase order funding solutions work and what to expect during the process. You can also learn more about how our PO funding works step by step, or apply for purchase order funding when you have a confirmed government order. And when you’re ready, simply start your funding application online and our team will guide you through the rest.
