A purchase order defines a commercial intention
The order should identify the legal parties, goods, specification, quantity, price, delivery responsibilities and payment conditions. Amendments and related agreements can materially change the obligation. The financing record needs the complete current version.
A purchase order alone may not establish a final or unconditional payment claim. The lender needs to understand cancellation, acceptance, dispute and refund terms. Those terms affect what can be financed and how repayment is protected.
An eligible cost is connected to the funded trade
A draw should relate to a specific supplier obligation, invoice or approved stage cost. A verified supplier destination helps preserve that connection. The budget needs to show which costs are financed and which are covered by the parties themselves.
Supplier changes, duplicate invoices or a changed beneficiary should trigger review. A recorded investment approval and a verified payment instruction provide different safeguards and should remain separate.
The documented financing cycle
Each stage carries evidence and a commercial consequence. The actual transaction determines which evidence is required.
- 01
Contract and facility
Complete the commercial terms, financing agreement, security and collection arrangements.
- 02
Draw request
Identify the eligible cost and show that its draw conditions are satisfied.
- 03
Production or purchase
Monitor performance, supplier evidence and the goods or rights supporting the exposure.
- 04
Shipment and acceptance
Connect transport and acceptance records to the funded batch and buyer obligation.
- 05
Repayment and reconciliation
Apply received cash to the facility and retain the remaining exposure and exceptions.
Expected payment and received cash are different
The collection schedule is an expectation until payment is received. A receivable can remain outstanding after delivery or acceptance. The fund’s records should show the contractual due date, ageing, amount collected and unresolved items.
Collection through the specified account supports control, but disputes or insolvency can still affect recovery. Reconciliation should identify partial payments, deductions, currency differences and the allocation of receipts.
A revolving facility needs repeat eligibility
Repaid capital can support another eligible draw within the agreed facility. Recycling should depend on actual collections, available capacity and continued satisfaction of the approval conditions.
A new batch should not inherit a clean status solely because an earlier batch performed. Changes in the supplier, buyer, goods, timing or security require the appropriate review. Revolving capital needs a recurring discipline.