Purchase Order Financing (PO financing) is a funding solution that provides capital to businesses to pay suppliers for goods related to specific purchase orders. This allows businesses to fulfil large orders without straining their cash flow.

A business receives a purchase order from a customer but lacks the funds to fulfil it. What can they do? One option is to approach a PO financing company, who pays the supplier directly, which allows the business to deliver the order to the customer. Once the customer pays the financer for the order, the business gets its margin minus fees and/or interest.

Businesses that benefit most from PO financing are typically those that:
• Have received large orders they cannot fulfil due to limited capital.
• Are experiencing rapid growth and need to meet increasing demand.
• Operate in industries with long payment terms.
• Are in a growth phase and need to invest in their assets.

Eligibility criteria includes:
• A legitimate purchase order from a creditworthy customer.
• Suppliers who can deliver the goods required.
• A demonstrated ability to fulfil the order.
• A good credit history. But, GrowKap focuses more on the strength of the purchase order and your customer’s creditworthiness.

PO financing costs includes:
• A percentage of the purchase order value.
• A percentage linked to the duration of the financing.
• Additional fees may apply, such as due diligence fees, processing fees, or administrative fees.

Approval takes from a few hours to a couple of weeks, depending on the complexity of the transaction and the responsiveness of all parties involved. Established relationships with financers can expedite this process.

If the customer doesn't pay the invoice, the terms of the financing agreement determine what happens next. The financing company may require the business to cover the amount. In some cases, the business’s assets may be used as collateral.

Yes! PO financing can be used alongside other financing solutions such as invoice factoring, lines of credit, or business loans. Coordinating these solutions is essential to ensure they complement each other without conflicting.

PO financing provides advantages such as:
• Enabling businesses without sufficient cash flow to accept large orders.
• Helping maintain positive relationships with suppliers by ensuring timely payments.
• Obtaining potential discounts from suppliers thanks to reducing payment terms.
• Supporting business growth without taking on additional debt.
• Providing fast access to funds compared to traditional loans.

PO financing disadvantages include:
• It may be more expensive than other financing.
• Not all businesses or purchase orders qualify for financing.
• Dependency on the creditworthiness of your customers.

No, purchase order financing and trade credit are different. Trade credit is extended by suppliers allowing businesses to pay for goods or services at a later date. PO financing involves a third-party financer who provides funds to pay suppliers upfront.

To apply for GrowKap’s PO financing, there are 2 simple steps:
• Register on GrowKap and provide information about your company (only for the first financing request).
• Submit a financing application with details about two purchase orders: the one from your customer and the one to your supplier.

Though common in North America, this is something new on the European market.

PO financing helps you pay your supplier so you can deliver the order to your customer without using any of your cash you receive your margin at the end of the sale. Factoring gets you funds after a sale is completed. With factoring, you pay your supplier, deliver the order and send an invoice to your customer. You sell this invoice to a factoring company at a discount. They give you most of the invoice amount immediately. When the customer pays, the factoring company sends you the rest, minus their fee. 
So, with factoring you pay your suppliers with your own funds, but with PO financing none of your own cash goes out.

GrowKap is part of AREA42, the innovation lab established by Credendo. The combination of AREA42’s focus on digital innovation and Credendo’s 100-plus years’ experience in trade credit insurance ensures GrowKap meets today’s business demands.

Yes, you can use GrowKap in conjunction with factoring. But, you need to coordinate these solutions to ensure they complement each other without conflicting.

Not at all! You can use GrowKap in conjunction with bank loans. Actually, purchase order financing isn’t an additional debt on your balance sheet.

By using PO financing, you can secure the funds needed to fulfil large orders without raising capital through investors or taking on traditional loans. This allows you to maintain control of your business and keep your balance sheet healthy while meeting customer demands and driving growth.

No, the relationship with your customer won’t change. We only ask that you include our bank account instead of yours on your customer invoice so payment comes to our bank account.
We pay you your margin as soon as your customer pays us.

Our goal is to move very fast. For the first financing request additional information will be needed to get to know you. However, the next financing requests will require very little information. We’re talking about hours!

PO financing is typically not considered a loan but rather a cash advance against future sales. This avoids additional debt on your balance sheet.

No upfront cash from you! GrowKap will cover it all – 100%. You’ll see money coming in at the end of the deal without seeing money going out at the start.

Our goal is to deliver a frictionless and painless experience. We might not be perfect but will always aim for it. We do the heavy lifting of ensuring your supplier gets paid, your customer pays, and you get paid.

As soon as we agree on a specific transaction, cash is reserved on our side for that upcoming transaction. The cash will then be released upon receipt of the goods and the invoice from your supplier.