Purchase order finance: fund a confirmed order before the buyer pays
Purchase order finance funds the material and costs of a confirmed customer order before the customer pays. The lender relies on the order, the buyer's strength and the supplier's record of delivering, and is usually repaid from the buyer's payment once the invoice is raised. It suits a supplier whose order is bigger than its cash.
Capnix is not a lender and never lends its own capital. The lender decides whether to fund an order, and on what terms. We build the case from the order, share your file with lenders on our panel only after you give consent, and run the lender application. Getting your loan through us costs you nothing.
- Loan
- Purchase Order Finance
- Decided by
- The lender
- Cost to you
- ₹0
- Last checked
The facts that matter
| Fact | What it means | Source |
|---|---|---|
| Payment protection | A buyer must pay a micro or small supplier within the agreed period, at most 45 days from acceptance, or owe compound interest at three times the RBI bank rate. | MSME Samadhaan portal Checked 02-Oct-2026 |
| Cost disclosure | A fee that is missing from the Key Facts Statement cannot be charged unless you have explicitly agreed to it. |
RBI Key Facts Statement circular, 15-Apr-2024 Checked 02-Oct-2026 |
| Penal charges | A penalty is a penal charge, not extra interest, and it cannot be added to the loan to earn more interest. |
RBI penal charges circular, 18-Aug-2023 Checked 02-Oct-2026 |
How purchase order finance works
Lenders handle the steps differently, but the order usually runs as follows.
- You win a confirmed order or work order.
- You get a quote from your supplier for the material or service.
- The lender funds the purchase.
- You deliver the goods or complete the work.
- You raise the invoice. The funding often moves to invoice discounting at this point.
- The buyer pays, and the lender takes its money from that payment.
Order stage or invoice stage?
The two products fund the same sale at different moments. The rows below describe usual lender practice, not rules.
| Item | Purchase order finance | Bill discounting |
|---|---|---|
| Funding starts | After the order is confirmed | After the buyer accepts the invoice |
| The lender relies on | The order, the buyer and your delivery record | The accepted invoice and the buyer's payment |
| The buyer pays | The lender or a designated account | The lender on the due date |
| If delivery is delayed | The risk sits with you and the lender | Funding has not started yet |
| Best for | A big order that needs material first | A delivered order waiting for payment |
See also
What lenders look at
A confirmed order is the start of the case, not the whole case.
- How strong the buyer is, and how it has paid other suppliers
- Your record of delivering similar orders on time
- The margin on the order after your costs
- Your supplier's terms and your plan to deliver
- How and when the buyer's payment will reach the lender
- Source
- MSME Samadhaan portal
- Checked
Worked example: funding the material for a ₹20,00,000 order
A supplier wins an order of ₹20,00,000. The material costs ₹12,00,000, funded for 75 days until the buyer pays. The example rate is 10.5% a year, the top of the range one public sector bank publishes for micro enterprise loans up to ₹25,00,000. Your lender sets the rate and how much of the cost it funds.
| Item | On the funded material |
|---|---|
| Amount interest is charged on | ₹12,00,000 |
| Interest for 75 days at 10.5% a year | ₹25,890 |
Cost of funds = amount x rate x days / 365. Fees and taxes are extra. Compare the cost with the margin you expect on the order.
Source: Bank of Baroda MSME loan rates, checked 02-Oct-2026.
Who it suits and who it does not
A strong fit if
- You have a confirmed purchase order or work order
- The order is profitable but needs cash for execution up front
- The buyer pays after delivery or after a milestone
Not a fit if
- You hope to win an order that is not confirmed yet
- The order has thin margins that the funding cost would erase
How Capnix fits
- Start with your free Capnix score. It shows how your file reads before a lender sees the order.
- Order, buyer and supplier details reach a lender only after you give consent, and you can withdraw that consent in your Capnix account.
- The lender pays Capnix a fee after disbursal. It is never added to your cost.
More than a loan. A team that gets you there
Funding tied to confirmed demand
We build the case around the real order, the buyer's terms, your supplier payments and the expected collection.
Support for order-led growth
We approach lenders who understand that a bigger order can strain cash before it improves it.
Where this helps
- Buy raw material or stock for a confirmed order
- Pay suppliers before the customer pays you
- Fulfil a large order without disturbing regular working capital
- Take on bigger orders with a clearer funding plan
What happens after you start
We work out your Capnix score first, then work the lender applications with you until the money is disbursed.
See how it worksLoan products, rates, and eligibility are determined by the lenders on our panel. Capnix is not a lender and does not lend its own capital. We run your loan journey end to end.
Have a question?
Find answers here
Whether you are scaling up, smoothing cash flow, or buying new equipment, we take your file to the right lender and stay with it through to disbursal.
Read the order. Matched to the right lender
Order-backed funding only works when the lender can see the buyer, supplier, margin, and payment path clearly. We read the order cycle and package the funding need around execution.
From there we approach lenders who understand confirmed-order finance, so a growth opportunity does not get lost because cash is tied up elsewhere.
Real people,
start to disbursal.
No hand-offs and no generic replies. A dedicated team
works the lenders while you keep running your business.