Month: July 2021

Good news – you have a purchase order and everything seems great!

Bad news – you don’t have the funding to successfully deliver on your purchase order

What do you do? That’s where the People’s Fund comes in.

In this article, we will take you through the requirements and user journey of successfully applying for funding:

WHO CAN APPLY?

Having a valid PO (purchase order) is the first step to getting funded – we have an article (link) that breaks down what a PO is in greater detail. 

Once a business has a valid PO, it needs to meet the following requirements:

1. Your business is at least 51% black-owned and 
2. You require R1 million or less in capital
3. You have worked with the client before (in the past 12-months) *
4. Your project can be completed in 60 days or less
5. You have a minimum of 20% gross profit margin on your project

* We fund first-timers on the basis that you’re working with a client on our preferred client list which can be found here: https://thepeople.co.za/preferred-purchase-order-clients/

WHAT FEES DO I PAY? 

Common queries we receive are based on the fees charged and how they are calculated? At TPF we do not charge interest, We have a facilitation fee that starts from 6% of the total purchase order value (plus VAT). If your total purchase order value is R50 000 or less, then we charge a standard fee of R3 000 (plus VAT). NB – the 6% is only applicable if your project has the following: 30% profit margin and a low-risk profile 

WHAT IS A LOW-RISK PROFILE? 

The following factors contribute to the risk profile of a project:

• Length of project 

• Experience of entrepreneur (have you done a PO before) 

• Client & supplier/s  

• Complexity of project 

Length of project – We crowdfund the capital we use to fund POs and in order to maintain our historic returns for the investors and the crowd, we need to keep cycling their money in our system. The longer the project, the less projects we can fund and that not only impacts the crowd but also the other entrepreneurs waiting for their POs to be funded. 

Experience of entrepreneur – the more experience an entrepreneur has in POs, the lower the risk as they are aware of what needs to be delivered, how to invoice and how to follow up on payments

Clients & supplier/s – repeat clients and supplier/s help lower the risk profile of the project

Complexity of project – the greater the complexity of your project, the greater the risk profile. Construction is a great example of this, We do however fund small-scale construction projects like renovations such as installing doors, ceilings, tiles etc. 

HOW DO I APPLY?

Now that your PO is valid and you meet all the requirements, you can apply for funding here – https://thepeople.co.za/purchase-orders/

Our application only takes 5 minutes and you can get funded in 2 – 5 days. Avoid tedious paperwork so you can focus on delivering POs and growing your business. We have a dedicated team who will walk you through all the steps once you’ve applied which will help put your mind at ease.

So, what are you waiting for? Get funded today. 

At the People’s Fund, a valid purchase order is the first step on the journey to funding entrepreneurs, but, increasingly we are receiving non-valid purchase orders, which we can unfortunately not assist with funding. In this article, we break down purchase orders to help you have a better understanding of them. 

Before we get into it, let’s define some of the terms:

PO: purchase order

Buyer: the end client. The one who issues out the purchase order

Supplier: the entrepreneur. The one who the purchase order is awarded to

Purchase Orders Explained

Simply, a purchase order is a legally binding document sent by a buyer to a seller requesting products or services. Often referred to as ‘PO’s’, they outline the delivery date and terms of payment that the buyer must adhere to and also detail the items the buyer wishes to purchase and clearly state the price.

Purchase orders include key reference information such as tracking numbers (to track the purchase order as it moves through the supplier’s system), as well as information about the type of item/items ordered, the quantity ordered, and the agreed-upon price.

All purchase orders should contain the following information:

• Date of issue
• Purchase order number
• Details of goods
• Shipping details
• Name and address of the buyer
• Name and address of the seller
• Terms and conditions of the sale

Invoices vs Purchase Orders

A common error made by many entrepreneurs is mistaking an invoice for a purchase order. It’s quite an easy mistake to make. Both are legally binding financial documents exchanged between sellers and buyers. It is important to note that a purchase order is often used to create an invoice, however, each document is used at a different point in the buying process. Purchase orders and invoices are also used by different people within the business.

In other words, a purchase order is used by a buyer to place an order and is issued before delivery.

An invoice is issued by a seller after an order is delivered. It defines the amount the buyer owes for the purchased goods and the date by which the buyer needs to pay.

Purchase orders:

• Created by the buyer
• Created before purchase takes place
• Details the goods required
• Includes proposed payment details

Invoices

• Created by the seller
• Created after purchase
• Confirms goods delivered
• Requires payment on a specific date

Different Types of Purchase Orders

There are 2 basic types of purchase orders:

Standing purchase orders:

Buyers can create special orders for especially large shipments or recurring purchases. A standing purchase order allows a buyer to purchase the same products many times over using the same purchase order number. This saves time and hassle.

Blanket purchase orders:

A blanket purchase order is an agreement between both parties for multiple deliveries over a set period, for a set price. Blanket orders are usually used between companies with a strong relationship, and sometimes come with discounts or other incentives.

Conclusion

That, in a nutshell, covers the basics of what a purchase order is. Once you have a valid PO, we can start the process of hopefully funding your entrepreneurial dreams.  

To find out more on all things “Purchase Orders”, see our FAQs section – https://thepeople.co.za/faqs-for-purchase-order-funding/

To apply for funding, head over to our website – https://thepeople.co.za/purchase-orders/

The People’s Fund is excited to announce Precious Mvulane CA (SA), to the role of an independent non-executive director. The board is excited to be appointing the first independent director to the board as support to the governance of this continuing growing enterprise.

Precious is a Chartered Accountant (SAICA), Registered Auditor (IRBA) and an award-winning businesswoman, author and content developer. Her expertise lies in finance, compliance and governance with 20 years of experience in different finance roles, in the private and public sectors. She has also been involved with governance structures for the past 14 years and sat on 10 boards as an audit committee member, of which she chaired 5. 

Currently, Precious is the shareholder-manager of GAD Consulting Services Inc, a Training, Publishing and Development organisation that aims to educate, empower and enable leaders to achieve their objectives.

Precious’ other accolades include:

• Listed as one of the Best New Businesses under the Best New Business Category for the 2015 South Africa SMME awards hosted by the Africa Growth Institute.
• Selected as one of the top 15 Changemakers for 2013 by Spark International Inc.
• National award winner 2013 – Ligugu Lami Awards.
• Awarded the Small Business Champion Award – South Africa 2014, Woman in Business –2nd Runner Up.
• Nominated as one of the finalists for the Women-Owned Business category hosted by SA Premier Business Awards 2014/2015.

Her extensive experience in compliance and governance will be a welcome addition as TPF continues to work with IFWG in its sandbox to regulate crowdfunding in South Africa. 

The board and executive look forward to welcoming her to the team.