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Purchase Order Financing Agreement for Belgium

Purchase Order Financing Agreement Template for Belgium

A Purchase Order Financing Agreement under Belgian law is a specialized financial contract that enables businesses to obtain funding based on confirmed purchase orders from their customers. The agreement outlines the terms and conditions under which the financial institution will provide advance funding against these purchase orders, typically ranging from 70-80% of the purchase order value. The document incorporates Belgian financial regulations and EU directives, particularly focusing on security interests, payment terms, and financial services requirements. It details the mechanics of advances, repayment obligations, security arrangements, and risk mitigation measures specific to the Belgian jurisdiction.

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What is a Purchase Order Financing Agreement?

The Purchase Order Financing Agreement is designed for businesses operating in Belgium that require working capital to fulfill customer orders but lack sufficient funds or traditional banking facilities. This financing solution is particularly valuable for growing businesses, importers, or manufacturers who receive large orders but need upfront capital for suppliers or production costs. The agreement, governed by Belgian law and compliant with EU regulations, typically provides financing of 70-80% of confirmed purchase orders from creditworthy buyers. The document includes comprehensive provisions for security interests, advance mechanisms, repayment terms, and risk management, tailored to meet Belgian financial services regulations and commercial law requirements. It serves as a crucial tool for businesses to bridge the funding gap between receiving orders and delivering goods to customers.

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

1. Parties: Identification of the financing party, the client (borrower), and any guarantors

2. Background: Context of the agreement, including the client's business nature and purpose of the financing arrangement

3. Definitions: Detailed definitions of terms used throughout the agreement, including financial terms, documentation requirements, and operational concepts

4. Facility and Purpose: Details of the financing facility, including maximum amount, purpose, and general terms

5. Advance Mechanics: Process for requesting advances, required documentation, and approval procedures

6. Interest and Fees: Specification of interest rates, processing fees, and other charges

7. Repayment Terms: Terms for repayment of advances, including timing and methods

8. Security and Collateral: Description of security interests, including assignment of purchase orders and receivables

9. Representations and Warranties: Standard and specific representations made by the client

10. Covenants: Positive and negative covenants binding the client

11. Events of Default: Circumstances constituting default and consequences

12. Termination: Terms for termination of the agreement by either party

13. Governing Law and Jurisdiction: Specification of Belgian law as governing law and jurisdiction details

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

1. Guarantees: Required when personal or corporate guarantees are part of the security package

2. Insurance Requirements: Detailed insurance requirements when specific insurance coverage is needed for the financed goods

3. Foreign Currency Provisions: Required when purchase orders or payments involve multiple currencies

4. Sub-participation: Needed when the financier may want to participate out portions of the facility

5. Electronic Trading Platform Integration: Required when the financing is linked to specific e-commerce or trading platforms

6. Sanctions and Anti-Money Laundering: Extended provisions when dealing with international trade or high-risk sectors

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

1. Schedule 1 - Form of Purchase Order: Template or requirements for acceptable purchase orders

2. Schedule 2 - Advance Request Form: Standard form for requesting advances under the facility

3. Schedule 3 - Fee Schedule: Detailed breakdown of all applicable fees and charges

4. Schedule 4 - Eligible Buyers List: List of approved buyers whose purchase orders can be financed

5. Schedule 5 - Security Documents: Forms of security documents required under the agreement

6. Schedule 6 - Conditions Precedent: List of documents and conditions required before first drawdown

7. Appendix A - Calculation of Interest and Fees: Detailed methodology for calculating interest and fees

8. Appendix B - Compliance Certificate: Form of periodic compliance certification required from the client

Authors

Alex Denne

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

Jurisdiction

Belgium

Publisher

Ƶ

Document Type

Purchase Agreement

Cost

Free to use
Relevant legal definitions















































Clauses



































Relevant Industries

Manufacturing

Wholesale Trade

Retail

Import/Export

Textiles

Electronics

Industrial Equipment

Consumer Goods

Agricultural Products

Construction Materials

Medical Supplies

Relevant Teams

Finance

Legal

Treasury

Risk Management

Commercial Banking

Trade Finance

Credit

Operations

Supply Chain

Procurement

Compliance

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Financial Controller

Credit Manager

Commercial Finance Manager

Risk Manager

Legal Counsel

Supply Chain Manager

Procurement Director

Account Manager (Banking)

Trade Finance Manager

Working Capital Manager

Operations Director

Company Secretary

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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