1. What is Purchase Order Financing?
2. How does Purchase Order Financing work?
3. What types of businesses benefit from PO financing?
4. What are the eligibility requirements for PO financing?
5. How much does PO financing cost?
6. How long does it take to get approved for PO financing?
7. What happens if the customer does not pay the invoice?
8. Can PO financing be used with other financing options?
9. What are the advantages of Purchase Order Financing?
10. What are the disadvantages of Purchase Order Financing?
11. Is Purchase Order Financing the same as Trade Credit?
12. How can I apply for Purchase Order Financing?
13. Why have I never heard of Purchase Order Financing?
14. What is the difference between Factoring and Purchase Order Financing?
15. Is GrowKap part of a bigger company?
16. I already have factoring in place, can I use GrowKap?
17. I already have a bank loan, is that an issue?
18. Can I avoid raising capital with Purchase Order Financing?
19. Do I need to change my relationship with my customer when using GrowKap?
20. I need to move fast, do I need to wait to get my financing?
21. Will Purchase Order Financing increase the debt of my company?
22. How much cash do I need to put upfront?
23. I don’t have time for administrative tasks, how does that work?
24. How can my supplier be confident he will get paid?
1. What is Purchase Order Financing?
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.
2. How does Purchase Order Financing work?
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 for the order to the financer, the business gets its margin minus fees and/or interest.
3. What types of businesses benefit from PO financing?
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.
4. What are the eligibility requirements for PO financing?
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.
5. How much does PO financing cost?
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.
6. How long does it take to get approved for PO financing?
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.
7. What happens if the customer does not pay the invoice?
If the customer does not 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.
8. Can PO financing be used with other financing options?
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.
9. What are the advantages of Purchase Order Financing?
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.
10. What are the disadvantages of Purchase Order Financing?
PO financing disadvantages include:
• It can be more expensive than other financing.
• Not all businesses or purchase orders qualify for financing.
• Dependency on the creditworthiness of your customers.
11. Is Purchase Order Financing the same as Trade Credit?
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.
12. How can I apply for Purchase Order Financing?
To apply for GrowKap’s PO financing, you need to:
• 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.
13. Why have I never heard of Purchase Order Financing?
Though common in North America, this is something new on the European market.
14. What is the difference between Factoring and Purchase Order Financing?
PO financing helps you pay your supplier so you can deliver the order to your customer without using any of your cash but 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. 
15. Is GrowKap part of a bigger company?
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.
16. I already have factoring in place, can I use GrowKap?
Yes, you can use GrowKap in conjunction with factoring. But, you need to coordinate these solutions to ensure they complement each other without conflicting.
17. I already have a bank loan, is that an issue?
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.
18. Can I avoid raising capital with Purchase Order Financing?
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.
19. Do I need to change my relationship with my customer when using GrowKap?
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.
20. I need to move fast, do I need to wait to get my financing?
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!
21. Will Purchase Order Financing increase the debt of my company?
PO financing is typically not considered a loan but rather a cash advance against future sales. This avoids additional debt on your balance sheet.
22. How much cash do I need to put upfront?
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.
23. I don’t have time for administrative tasks, how does that work?
Our goal is to deliver a frictionless and painless experience. We might not be perfect but will always aim for it. Your first financing request requires more information because we need to get to know you. But, from the second financing request, you’ll see that approval goes very quickly - a matter of hours. And, we do the heavy lifting of ensuring your supplier gets paid, your customer pays, and you get paid.
24. How can my supplier be confident he will get paid?
As soon as we agree on a specific transaction, cash is reserved on our side for the transaction to come. The cash will then be released upon receipt of the goods and the invoice from your supplier.

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