RM Capital Charts the PO Funding Path for Year-End Orders
Picture the stretch of time that sits between a signed order and a delivered product. That stretch is exactly what RM Capital, the Melrose Arch based niche funder, is putting under the spotlight. As the year enters its closing quarter, a steady stream of South African suppliers are being pushed to move stock ahead of the December wind down, and the firm wants owners to know how a funded transaction unfolds well before the paperwork ever reaches their desk.
At this time of year, the value of an incoming order frequently outstrips whatever is sitting in the bank. A business that distributes finished goods might land a contract with a corporate client or a government department, yet it still owes its own supplier money before a single invoice can go out. Closing that shortfall is the reason RM Capital exists, and the firm holds that a transparent view of how it all works strips away a great deal of the nervousness owners carry about bringing in outside funding.
What purchase order funding does
Purchase Order Funding, a product RM Capital also refers to as tender order funding, lets a company pay its supplier for stock it plans to resell or distribute to a buyer who has already issued a written purchase order. The supplier receives payment at the outset to make or supply the goods, and the business repays the funding once its customer settles up. RM Capital can finance as much as 100% of the purchase order costs.
Most of these arrangements are structured by the firm as an invoice factoring transaction. Factoring should not be confused with a loan. What happens is that RM Capital buys the rights to the money due from the customer, then either pays the supplier directly or issues payment guarantees. For a company on the rise, the upshot is the ability to say yes to bigger orders without piling on bank debt or giving away a share of the business.
The process, one step at a time
A clear sequence is laid out on the RM Capital website, and this month the firm is pointing businesses that are holding year-end orders toward it.
To begin, the business hands RM Capital a copy of the purchase order or a signed appointment letter, along with the supplier agreement and either a pro forma supplier invoice or a quotation. Together these papers spell out what has been ordered, who placed the order, and what fulfilling it will cost.
Next, RM Capital requests particular details about the business so the transaction can be assessed. That assessment weighs up the key elements of the deal, the supplier among them, to be sure it has both the standing and the capacity to supply the products on order.
After that, with every required document and piece of information gathered, RM Capital lets the business know that the purchase order transaction has the green light and spells out any further securities that may apply.
Then a factoring agreement and a guarantee agreement go out to be signed, and the money is paid across to the supplier. From there the goods can be manufactured or dispatched and delivered to the end customer.
At the close, the customer settles the invoice tied to the purchase order, and that money repays the purchase order funding. Whatever remains after the funding and its costs are covered goes to the business.
Who the facility is built for
This facility is built with entrepreneurs and growth businesses in mind, specifically those selling finished goods, raw materials or components, whether to other businesses or to government departments. The goods have to be supplied on a supply and delivery basis, with the supplier handling delivery or farming it out to a reputable third party. Construction, cleaning and security services fall outside what RM Capital will fund under this product, and the firm looks for profit margins above 20%.
How credit worthy the ordering customer is forms the heart of every decision. Everything rests on whether that customer can pay when due, which is precisely why a solid purchase order from a dependable buyer counts for so much. Plenty of smaller suppliers find this is a very different conversation from the one a bank offers, since banks tend to zero in on the borrower's own balance sheet and fixed assets.
When owners weigh up Purchase Order Funding Companies, a common question is whether the funder will stick around as the business expands. RM Capital highlights a case shared on its own website. The firm backed a medium sized, woman owned BEE company so it could meet purchase orders from a government department in the Western Cape. The opening round of funding came to R850,000. As the company expanded and its order commitments climbed, RM Capital kept funding it, and across 18 months it advanced more than R5,000,000 to the business, helping it supply essential products to the Western Cape Government.
Why the timing matters in October
The final three months of the year carry their own distinct strain. Buyers are keen to have stock on hand before offices and factories shut for the festive break, and suppliers want to be paid before they let their goods go. A business wedged between those two demands can forfeit an order for no reason other than being unable to fund the stock in time.
Purchase Order financing is made for precisely this kind of pinch. Since the funding attaches to one specific order and one specific customer, it can be arranged for the deal in front of the business rather than as a sweeping credit line. RM Capital adds that it grants funding approval within time frames that make commercial sense, with confidentiality and little paperwork, and that clients deal straight with the decision makers.
A wider set of working capital options
Purchase order funding is one piece of a wider spread of short to medium term facilities. RM Capital provides invoice discounting and factoring, in which unpaid invoices become an asset for raising cash flow, whether by factoring a whole book of debts or by discounting one invoice. It also offers accounts factoring for advocates of the South African Bar and for other professionals including doctors, accountants, engineers and architects, where funding can clear within 24 hours.
Beyond that, the firm builds cash flow funding structures for businesses up against short term pressure, shaped around anticipated future cash flow instead of locking up the core assets a business still needs for rent, payroll and day to day costs. And for companies that find mainstream banks hard to crack, RM Capital provides structured finance, taking in working capital, cash flow and revolving credit facilities tailored to the client's situation.
Practical preparation for suppliers
For any business anticipating orders between now and December, RM Capital recommends keeping the key documents on standby before a deal shows up: the customer's purchase order or appointment letter, a supplier quotation or pro forma invoice, and the basic company details the review calls for. Having that bundle ready trims the distance from order to approval and reassures the supplier that payment is on its way.
Owners keen to read the full qualifying criteria, work through the step by step process or apply can find out more at https://www.rmcapital.co.za/.
About RM Capital
RM Capital is a niche funder operating from Melrose Arch, Illovo, Johannesburg. The firm concentrates on purchase order funding, accounts receivable factoring, invoice discounting, bridging and structured finance, and builds short to medium term funding solutions for growth companies. Its clients are generally businesses that cannot line up bank financing in the short term yet already have the groundwork laid for long term success. Its funding can serve cash flow, working capital or act as a financial bridge keyed to particular exit events.
Media Contact
RM Capital
Email: info@rmcapital.co.za
Phone: +27 11 447 7596
Website: https://www.rmcapital.co.za/