RM Capital Explains How It Pays Suppliers Directly to Get Orders Moving

A signed purchase order is a strong start, but for many South African growth businesses it is not the finish line. Plenty of manufacturers and wholesalers will not produce or release stock until they are paid, and that requirement can freeze a confirmed order, particularly when the business that won it is still waiting for its previous customer to settle. This November, RM Capital, a niche funder based at Melrose Arch in Johannesburg, is putting the spotlight on the supplier’s side of the transaction and on how its funding gets money to the supplier so the goods can move.

The pressure builds towards year end. Customers want orders filled before the holiday shutdown or early in the new year, and suppliers want certainty before they commit stock and production time. A business that cannot pay upfront can lose its place in line.

The supplier gets paid, the business takes on no loan

With Purchase Order Funding from RM Capital, a business can pay its supplier upfront for goods it plans to resell or distribute to a customer who has issued a written purchase order. The supplier can then manufacture or deliver the goods before the business has been paid by its customer.

The structure is what sets it apart from a bank loan. In most cases the funding is arranged as an invoice factoring transaction, and factoring is not a loan. RM Capital buys the rights to the payment the customer will make, and on that basis it either pays the suppliers directly or provides payment guarantees. The business carries no bank debt and keeps all of its equity.

From the supplier’s point of view, the funder is committed to the deal. An upfront payment or a payment guarantee gives the supplier the assurance it needs to start production or release the goods. From the business’s point of view, it can take on bigger orders and grow its sales without first holding the full cost of the goods in its bank account.

Funding that can cover the whole order

RM Capital will finance up to 100% of the purchase order costs. Once the customer pays the invoice, that payment settles the funding and its costs, and the balance goes to the business. Put simply, the business keeps its margin on the deal while RM Capital carries the cost of the goods until the customer pays.

This works well for businesses whose sales are climbing faster than the cash coming in. When an order lands that is larger than anything the business has handled before, Purchase Order financing can decide whether it says yes with confidence or has to walk away.

Which businesses qualify

The funding is built for businesses selling finished goods, raw materials or components to other businesses or to government departments. Service businesses, including construction, cleaning and security, are not covered. Profit margins must be above 20%, and the goods must be supplied on a supply and delivery basis, with the supplier handling delivery or outsourcing it to a reputable third party.

Since repayment depends on the customer paying for the order, the customer’s creditworthiness is central to the assessment. RM Capital also checks that the supplier has the reputation and capability to deliver the products ordered. That check protects everyone involved, because the business, the customer and the funder all rely on the supplier delivering what it promised.

From application to payment

The steps are straightforward. The business sends RM Capital a copy of the purchase order or signed appointment letter, along with the supplier agreement, pro forma supplier invoice or quotation. RM Capital then requests certain information about the business so it can review the transaction. When all the required information and documents have been received, the business is told of the approval and of any other securities required.

Next, a factoring agreement and a guarantee agreement are sent for signature, and the supplier is paid. When the customer settles the invoice, the funding and funding costs are paid off and the remaining balance goes to the business.

At every stage, clients speak directly to the decision makers. RM Capital aims to approve funding within time frames that make commercial sense, with utmost confidentiality and minimal paperwork.

What to look for in a funder

Anyone weighing up Purchase Order Funding Companies soon learns that the details make the difference. Who pays the supplier, how fast that happens and what follows when the customer pays all affect how well the funding performs in practice. RM Capital’s clients are usually unable to arrange bank financing in the short term but have the foundation in place for long-term success. The company applies commercial and legal acumen to building short to medium-term funding solutions around each client’s specific requirements.

Purchase order funding is one of several RM Capital products, alongside invoice discounting, accounts factoring for advocates and other professionals, cash flow funding, bridging and structured finance. A business that begins by funding one order can explore these options as its needs develop.

For a growth business entering the busy year end with a confirmed order in hand and a supplier waiting to be paid, RM Capital’s point is a practical one: the order itself may be what unlocks the funding.

Learn more at https://www.rmcapital.co.za/

About RM Capital

RM Capital is a niche funder specialising in purchase order funding, accounts receivable factoring, invoice discounting, bridging and structured finance, as well as other customised funding solutions. From its base at Melrose Arch in Johannesburg, the company designs short to medium-term funding for growth companies and entrepreneurs, built around each client’s specific requirements. Its clients are typically unable to arrange bank financing in the short term but have the foundation in place for long-term success, and the funding can be used for cash flow, working capital or as a financial bridge tied to specific exit events.

Media Contact
RM Capital
Email: info@rmcapital.co.za
Phone: +27 11 447 7596
Website: https://www.rmcapital.co.za/

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