How does an FPO arrange working capital to buy produce before the buyer pays?

This cash gap is the single biggest operational problem for trading FPOs, and you manage it with a mix of tools. 1) Member share capital and retained profits, your own money is the cheapest and most flexible working capital, so build it. 2) A cash credit or working capital limit from a bank, made easier by the FPO credit guarantee, draw it to pay members and repay when the buyer pays. 3) Warehouse receipt / pledge finance, store the produce, get a loan against the warehouse receipt, and sell later, this funds you and lets you wait for a better price. 4) Buyer advances, negotiate part advance from reliable buyers. 5) NABARD/NCDC and some NBFC working capital lines for FPOs. The discipline that keeps it working: pay members fairly but do not over commit beyond your funds, sell to buyers who pay promptly, and never let receivables pile up. Match your buying volume to the cash you can actually fund, growing slowly is far safer than over trading and running dry. Confirm current FPO credit lines and guarantee terms on the SFAC/NABARD portal.