For suppliers
Purchase order financing
Funding against a confirmed order, before the goods are made or shipped. The point in the cycle where a supplier is most often stuck.
The facts
- Who owes the money
- You, the supplier: full recourse. If delivery is not accepted, the order is canceled, or the proceeds fall short, you repay the advance on demand. The anchor’s letter of undertaking routes payment; it is not a guarantee.
- Who decides
- Your financier, on your anchor’s confirmed purchase order.
- What you need
- A confirmed purchase order from your anchor.
- How the cost is shown
- A guarantee charge, paid before the guarantees go to your vendors, and a charge on the financing, settled when the anchor’s payment comes through.
- Who can offer it
- It depends on your program.
How it works
Who owes the money: Under Purchase order financing, you carry the obligation, the financing is with full recourse: if your anchor does not pay, or you do not deliver, you must repay. What the arrangement is in your program is set out in your financier’s documentation.
Step 1 of 9Anchor: places a confirmed purchase order for goods that are not yet made or shipped.
- A document
- Goods
- Money
Read the steps
- Anchor: places a confirmed purchase order for goods that are not yet made or shipped.
- Supplier: applies for funding against that order, with a proforma invoice from each vendor it buys from to fill it.
- Anchor: confirms the purchase order and signs its letter of undertaking.
- Financier: sends each vendor a guarantee that it will be paid once delivery is confirmed.
- Vendor: supplies the materials or goods for the order.
- Supplier: delivers the goods, and the anchor accepts them and confirms the delivery note.
- Financier: pays the vendors, once the anchor has confirmed the delivery note.
- Supplier: invoices the anchor for the accepted goods.
- Anchor: pays the invoice on its normal terms, and its letter of undertaking routes that payment to the financier.
More about Purchase order financing
Beside the other products for suppliers
Under Reverse factoring, your anchor carries the obligation and settles with the financier. You are not borrowing against your own balance sheet. Under Purchase order financing and Invoice discounting, you carry the obligation, the financing is with full recourse: if your anchor does not pay, or you do not deliver, you must repay. What the arrangement is in your program is set out in your financier’s documentation.
What the documented framework says
Each statement is taken from the platform’s documented agreements and names the clause it rests on. Your own program’s documents govern, and none of this is legal advice.
Purchase-order financing is with full recourse: if delivery is not accepted, the order is canceled, or the proceeds fall short, you repay the advance and charges on demand. A security interest over the financed order, the goods and their proceeds is registrable under this product. What is taken in your program is set out in your financier’s agreement.
Supplier Master Participation Agreement, clause 4.3
Your anchor’s letter of undertaking routes the payment. It is not a guarantee, and it does not move the obligation to repay off you.
Anchor Master Participation Agreement, clause 3.11
Under Purchase order financing and Invoice discounting, you carry the obligation: the financing is with full recourse: if your anchor does not pay, or you do not deliver, you must repay.
Supplier Master Participation Agreement, clause 5.3
Before every trade you see the product, the amount payable to you, every deduction: financier discount, platform fee, VAT, and the effective annualized cost.
Supplier Master Participation Agreement, clause 1.2
Who can offer it, and how this page was checked
Which financiers offer this with your anchor is confirmed program by program. Ask us and we will tell you who offers it for yours.
This description has not yet been checked against the program documentation for this page. Where it and your financier’s agreement differ, the agreement governs.