Purchase Order Financing Agreement for Singapore

Purchase Order Financing Agreement Template for Singapore

A Purchase Order Financing Agreement under Singapore law is a specialized financing arrangement where a lender provides funding to a business based on confirmed purchase orders from creditworthy buyers. The agreement, governed by Singapore's financial regulations and contract law, outlines the terms under which the lender will advance funds, typically 70-80% of the purchase order value, enabling the borrower to fulfill orders they might otherwise lack the working capital to complete. The document includes detailed provisions for security, repayment terms, and compliance with Singapore's banking and securities regulations.

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What is a Purchase Order Financing Agreement?

Purchase Order Financing Agreements are essential tools for businesses in Singapore seeking working capital to fulfill customer orders. This document type is particularly relevant when companies have received purchase orders but lack the immediate funds to procure materials or complete production. A Purchase Order Financing Agreement sets out the terms under which a financial institution will advance funds against these orders, typically including detailed provisions for security, repayment, and risk management. Under Singapore law, these agreements must comply with strict banking regulations and financial services requirements, making them sophisticated instruments that require careful drafting and consideration of both commercial and regulatory aspects.

What sections should be included in a Purchase Order Financing Agreement?

1. Parties: Identification of the financing party and the recipient business

2. Background: Context of the financing arrangement and relationship between parties

3. Definitions: Key terms used throughout the agreement

4. Facility Terms: Core financing terms including amount, interest, and repayment

5. Security Arrangements: Details of collateral and security provided

6. Representations and Warranties: Statements of fact and assurances from both parties

7. Covenants: Ongoing obligations of the parties

8. Events of Default: Circumstances constituting default and consequences

What sections are optional to include in a Purchase Order Financing Agreement?

1. Insurance Requirements: Specific insurance coverage requirements for large purchase orders or high-value goods

2. Third Party Rights: Rights of purchase order issuer or other stakeholders when they have direct interests in the financing arrangement

3. Foreign Currency Provisions: Currency conversion and exchange rate provisions for international trade scenarios

What schedules should be included in a Purchase Order Financing Agreement?

1. Schedule of Purchase Orders: List of purchase orders being financed

2. Fee Schedule: Detailed breakdown of all fees and charges

3. Form of Drawdown Notice: Template for requesting funds under the facility

4. Security Documents: Copies of security agreements and related documentation

5. Conditions Precedent Checklist: List of requirements to be met before facility becomes effective

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Free to use

Relevant legal definitions

Clauses

Relevant Industries

Manufacturing
Trading
Wholesale
Supply Chain
Retail

Relevant Teams

Finance
Treasury
Legal
Operations
Risk Management

Relevant Roles

Chief Financial Officer
Finance Director
Treasury Manager
Trade Finance Manager
Credit Manager

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What is a Purchase Order Financing Agreement?

What sections should be included in a Purchase Order Financing Agreement?

What sections are optional to include in a Purchase Order Financing Agreement?

What schedules should be included in a Purchase Order Financing Agreement?

Authors

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