Solutions
Purchase-order finance
You hold the purchase order, and fulfilling it means buying before you deliver. This is financing that starts before an invoice even exists.
Definition
What it is
Purchase-order finance covers the stage before the invoice. You have won the tender and the purchase order has been issued, but fulfilling it means paying for goods or mobilising a project long before delivery.
The difference from receivables finance is that the risk here includes performance, not just collection. Assessment is therefore closer: the nature of the goods, the supplier's ability to deliver, and the record of the entity that issued the order. Our focus in this product is government purchase orders raised through Etimad.
Mechanics
How it works
Who
The supplier
What
Submits the government entity's purchase order and the quote from the vendor it will buy from
When
After the order is issued and before delivery
Who
Fkah
What
Verifies the order and the supplier's ability to perform, and sets the cost
When
Before any commitment
Who
Fkah
What
Pays the goods vendor directly, or transfers the amount as agreed
When
On order confirmation
Who
The supplier
What
Delivers to the entity and issues the invoice; the financing settles from the disbursement
When
When the entity disburses
Fit
Who it suits
- Etimad-registered companies with confirmed government purchase orders
- Suppliers of standard goods whose source and price can be verified
- Suppliers with a delivery record with government entities
- Companies with a Saudi CR and at least [TODO] months of continuous trading
Cost
What it costs
The cost is higher than receivables finance, because the period is longer and the risk includes performance. It is calculated over the days from paying the vendor to the entity's disbursement, and shown in full before you confirm.
Priced per transaction, with no sign-up fee and no monthly fee. Four things move the price: the buyer's strength, the tenor, the size of the amount, and the track record behind it. The cost is shown in full before you confirm, and Fkah's own rates will be published at launch.
How supply chain finance is pricedQuestions about this product
How is it different from receivables finance?
Does it cover private-sector purchase orders?
Do you pay the goods vendor directly?
Do you need security?
Next step
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