RM Capital Reveals What Makes a Purchase Order Fundable
Businesses chasing confirmed orders in the run up to the festive shutdown now have a clearer view of how one Johannesburg funder decides whether to back a deal. RM Capital, a niche funder operating out of Melrose Arch in Illovo, Johannesburg, has laid out the practical tests it applies whenever a growth company asks it to settle a supplier against a confirmed order. September marks the point at which South African suppliers enter the stretch toward the close of 2026, a window in which orders have to be fulfilled ahead of the December shutdown and in which the real bottleneck is frequently nothing to do with demand. The obstacle is the upfront cash needed to acquire stock. RM Capital provides funding to businesses across many sectors nationwide and presents itself as a convenient alternative to the mainstream banks for companies that cannot secure bank finance in the near term yet have the groundwork laid for lasting success.
What the facility actually covers
RM Capital characterises Purchase Order Funding, a product it also calls tender order funding, as a facility that lets a business settle its suppliers for goods it plans to on-sell or distribute to a customer who has issued a written purchase order. That distinction is important. This is not a general working capital loan that drops into a company account to be spent freely. It is directed at one particular transaction, tied to one specific order, from one specific customer, and it pays the supplier so that the goods can be made, released or dispatched.
It is precisely that structure that makes the facility viable for businesses a conventional lender would struggle to evaluate. A young firm with a slender balance sheet and no property to offer as security can nonetheless hold a signed order from a major corporate buyer or a government department. The order is the commercial event that gets financed, and much of the risk assessment rests on how strong the party behind it is.
The five steps the company works through
On its website, RM Capital breaks its process into five stages. First, the business hands over the purchase order alongside its supplier documentation. Next, it supplies its own business details for assessment. Should the transaction gain support, an approval notification follows. Factoring and guarantee agreements are then signed, and the money is paid directly to the supplier. Once the end customer pays the invoice, those proceeds settle the financing charges and whatever is left over goes back to the business.
Taken in sequence, the stages make plain why the opening paperwork takes the form it does. The items the company requests are a copy of the purchase order or a signed appointment letter, the supplier agreement, a pro forma invoice or quotation, and general business information. Each of these describes the transaction rather than the applicant's past, which fits a facility underwritten on the specific deal at hand.
The tests that decide whether an order qualifies
The qualifying criteria the company publishes are precise enough to be of use well before anyone submits an application. The goods have to be finished goods, raw materials or components being sold to a business to business customer or to a government entity. The deal must be a supply and delivery arrangement. The order's profit margin has to come in above twenty percent. The end customer's creditworthiness is labelled critical, while the supplier's reputation and ability to deliver are examined too. Construction, cleaning and security services sit beyond the facility's reach.
These tests reward a close reading, since they account for most of the rejections a supplier is likely to meet when first approaching Purchase Order financing. An order carrying a slim margin cannot cover the cost of the funding and still leave the supplier ahead, which is the reasoning behind the twenty percent threshold rather than any random bar. A services contract has no goods for a supplier to be paid for, so there is nothing for the facility to latch onto. And a buyer with a shaky payment record jeopardises the whole transaction, because repayment hinges on that buyer settling the invoice at the close.
Why the customer often matters more than the applicant
For a growth business, the standout feature of this structure is that the review does not open with its own trading record. It opens with the order and with whoever issued it. A supplier clutching a firm order from a well rated corporate or a government department presents a markedly different risk to a lender than that same supplier handing over financial statements from a company only a handful of years old.
This is the very space RM Capital says it was created to fill. Its clients typically cannot obtain bank finance in the short term, and the company casts itself as a funding partner rather than merely the other side of a transaction. Its website describes an approach grounded in a customised structure, insight and analytics, and says it strives to deliver funding approval within time frames that make commercial sense, with confidentiality, little paperwork, and approval inside twenty four hours. It further states that it can finance up to the entire cost of the purchase order.
Where the facility sits alongside the rest of the range
Order funding is just one of several facilities on offer, and in reality a growing business frequently calls on more than one of them across a single trading cycle. Invoice discounting and accounts receivable factoring free up cash already locked into issued invoices. Cashflow funding tackles short term working capital strain. Advocates accounts factoring serves advocates and other professionals, among them doctors, accountants, engineers and architects, whose fees are billed and then left waiting. Structured finance handles arrangements that simply do not fit a standard product.
The path many suppliers tread becomes obvious once it is spelled out. Order funding pays the supplier so the goods can be produced and delivered. That delivery produces an invoice. Where the payment terms on the invoice run long, discounting or factoring can unlock its value instead of leaving the business waiting. Deployed in tandem, the two facilities bridge the two moments in a trading cycle when cash sits furthest from the business.
What to compare when assessing the options
Suppliers sizing up Purchase Order Funding Companies tend to have a handful of practical questions. How fast can a decision come, and who makes it. What information has to be in hand before that decision. Whether the funder grasps the sector the goods move through, and whether it has backed transactions of a similar shape in the past. Whether the deal can be run again on the next order without restarting the assessment from scratch.
RM Capital stresses that applicants engage directly with its decision makers. For a supplier racing toward a delivery date, that access is more than a nicety. It is the difference between getting an answer that same afternoon and watching an order slip past the point at which it could still have been met.
Context heading into the final quarter
There is purpose behind the timing of this reminder. From September forward, South African suppliers run up against a squeezed calendar. Orders landing now have to see stock ordered, manufactured or imported, delivered and invoiced before the year end slowdown, and no amount of cash shortage shortens the lead times along that chain. A supplier who grasps the qualifying tests ahead of time can pull together the order, the supplier agreement and the pro forma invoice while the deal is still under negotiation, rather than once the delivery date is already in jeopardy.
It also hands a supplier a firmer footing for negotiation. Understanding that an order's margin must clear twenty percent reshapes how a quote gets priced. Understanding that the end customer's credit standing is pivotal reshapes which tenders are worth pursuing. These are commercial calls rather than financing ones, and they come out better when the funding tests are understood at the moment the order is being priced instead of weeks down the line.
About RM Capital
RM Capital is a niche funder specialising in accounts receivable factoring, bridging and structured finance, together with other customised funding solutions for businesses right across South Africa. Based at Melrose Arch in Illovo, Johannesburg, its services span purchase order funding, invoice discounting, cashflow funding, advocates accounts factoring and structured finance. The company says that across the last twelve years it has established itself as an alternative to the mainstream banks and has directly funded more than R400 million of deals, and that its directors carry over fifty years of combined experience spanning investment banking, accounting and law. The National Credit Regulator logo appears on its website.
Suppliers wanting to read the full qualifying criteria and process for themselves can find them on the RM Capital website at https://www.rmcapital.co.za/.
Media Contact
RM Capital
Email: info@rmcapital.co.za
Phone: +27 11 447 7596
Website: https://www.rmcapital.co.za/