RM Capital, a niche funder based at Melrose Arch in Illovo, Johannesburg, has set out the practical tests it applies when a growth business asks it to pay a supplier against a confirmed order. September has brought South African suppliers into the run up to the final quarter of 2026, a period when order volumes need to be delivered before the December shutdown and when the constraint on many businesses is not demand at all. It is the cash required to buy stock up front. The company funds businesses across a range of industries throughout South Africa and describes itself as a convenient alternative to mainstream banks for firms that cannot arrange bank financing in the short term but have the foundation in place for long term success.

What the facility actually covers

The company describes Purchase Order Funding, which it also refers to as tender order funding, as a facility that allows a business to pay its suppliers for goods it intends to resell or distribute to a customer who has completed a written purchase order. The distinction matters. The money is not a general working capital loan that lands in a business account to be used at will. It is applied to a specific transaction, against a specific order, from a specific customer, and it settles the supplier so that the goods can be manufactured, released or shipped.

That structure is what allows the facility to work for businesses that a traditional lender would find difficult to assess. A young company with a thin balance sheet and no property to pledge may still hold a signed order from a large corporate buyer or a government department. The order itself is the commercial event being financed, and the strength of the party who issued it carries a great deal of the weight.

The five steps the company works through

RM Capital sets out its process on its website in five stages. The business submits the purchase order together with its supplier documentation. It then provides its own business information for review. If the transaction is supported, the business receives an approval notification. Factoring and guarantee agreements are signed and the funds are paid across to the supplier. When the end customer settles the invoice, those proceeds cover the financing costs and the remainder is released to the business.

Read in order, the sequence explains why the paperwork requested at the start is what it is. The documents the company asks for 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. Every one of those items describes the transaction rather than the applicant's history, which is consistent with a facility that is underwritten on the deal in front of it.

The tests that decide whether an order qualifies

The qualifying criteria published by the company are specific enough to be useful before an application is ever submitted. The goods must be finished goods, raw materials or components being sold to a business to business customer or to a government entity. The transaction must be a supply and delivery arrangement. Profit margins on the order need to exceed twenty percent. The creditworthiness of the end customer is described as critical, and the reputation and delivery capability of the supplier are reviewed as well. Construction, cleaning and security services fall outside what the facility covers.

Those tests are worth reading closely, because they explain most of the declines a supplier is likely to encounter when approaching Purchase Order financing for the first time. An order with a thin margin cannot absorb the cost of the funding and still leave the supplier better off, which is the point of the twenty percent threshold rather than an arbitrary hurdle. A services contract has no goods to pay a supplier for, so there is nothing for the facility to attach to. And a buyer whose own payment record is uncertain puts the entire transaction at risk, because the repayment comes from that buyer settling the invoice at the end.

Why the customer often matters more than the applicant

For a growth business, the most significant feature of this structure is that the assessment does not begin with its own trading history. It begins with the order and with the party that issued it. A supplier holding a firm order from a well rated corporate or from a government department is presenting a very different risk to a lender than the same supplier presenting a set of financial statements from a company only a few years old.

This is the gap that RM Capital says it was built to occupy. Its clients are typically unable to arrange bank financing in the short term, and the company positions itself as a funding partner rather than a counterparty in a transactional arrangement. On its website it describes an approach built on a customised structure, insight and analytics, and states that it aims to deliver funding approval in time scales that make commercial sense, with confidentiality and minimal paperwork, and approval within twenty four hours. It also states that it can finance up to the full cost of the purchase order.

Where the facility sits alongside the rest of the range

Order funding is one of several facilities the company offers, and in practice a growing business often needs more than one of them over a trading cycle. Invoice discounting and accounts receivable factoring release cash that is already tied up in issued invoices. Cashflow funding addresses short term working capital pressure. Advocates accounts factoring is aimed at advocates and other professionals, including doctors, accountants, engineers and architects, whose fees are billed and then wait. Structured finance covers arrangements that do not fit a standard product at all.

The sequence many suppliers follow is straightforward once it is laid out. Order funding pays the supplier so the goods can be produced and delivered. The delivery generates an invoice. If the payment terms on that invoice are long, discounting or factoring can release the value of it rather than leaving the business waiting. Used together, the two facilities cover the two moments in a trading cycle when cash is furthest from the business.

What to compare when assessing the options

Suppliers weighing up Purchase Order Funding Companies generally have a small number of practical questions. How quickly can a decision be reached, and who reaches it. What information is required before that decision. Whether the funder understands the sector the goods are moving in, and whether it has funded transactions of a comparable shape before. Whether the arrangement can be repeated on the next order without starting the assessment from the beginning.

RM Capital makes a point of the fact that applicants deal with its decision makers directly. For a supplier working to a delivery date, that access is not a courtesy. It is the difference between a question being answered the same afternoon and an order slipping past the date on which it could still have been fulfilled.

Context heading into the final quarter

The timing of this reminder is deliberate. From September onward, South African suppliers are working against a compressed calendar. Orders placed now need stock ordered, manufactured or imported, delivered and invoiced before the year end slowdown, and the lead times on that chain do not shorten because a business is short of cash. A supplier who understands the qualifying tests in advance can assemble the order, the supplier agreement and the pro forma invoice while the transaction is still being negotiated rather than after the delivery date is already at risk.

It also gives a supplier a clearer basis on which to negotiate. Knowing that the margin on an order has to clear twenty percent changes how a quote is priced. Knowing that the end customer's credit standing is central changes which tenders are worth chasing. These are commercial decisions rather than financing ones, and they are made better when the funding tests are understood at the point the order is being priced instead of weeks later.

About RM Capital

RM Capital is a niche funder specialising in accounts receivable factoring, bridging and structured finance, along with other customised funding solutions for businesses throughout South Africa. It operates from Melrose Arch in Illovo, Johannesburg, and its services include purchase order funding, invoice discounting, cashflow funding, advocates accounts factoring and structured finance. The company states that over the past twelve years it has positioned itself as an alternative to mainstream banks and has directly funded over R400 million of deals, and that its directors hold in excess of fifty years of combined experience across the investment banking, accounting and legal fields. The National Credit Regulator logo is displayed on its website.

Suppliers who want 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: [email protected]
Phone: +27 11 447 7596
Website: https://www.rmcapital.co.za/