Balfour rolls out prompt payment scheme to all subbies

Grant Prior 8 years ago
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Balfour Beatty is rolling out its “voluntary finance scheme” across the whole UK supply chain to enable subcontractors to receive payments faster.

The scheme has been trialled in Balfour Beatty’s UK construction business and will now be expanded across all divisions.

Balfour said supply chain partners will be able to access funds as soon as invoices are approved, within their existing payment terms.

Subcontractors are then charged a fee for getting their money early.

An online portal – which operates like an internet banking site – gives the supply chain early visibility of payment status and allows them to better manage cash flow.

Balfour Beatty has been carrying out a successful pilot of the scheme with a number of subcontractors since March.

Jim Galvin, Director of One Four Four Ductwork, based in Liverpool, who took part in the pilot scheme, said: “For a medium sized business like ourselves, this facility is providing us with valuable and much needed access to funds which has given us the ability to release payments to our own supply chain further down the line quicker than anticipated.

“The system itself is easy to use and monitor and is extremely attractive to businesses like ours. I would not hesitate in recommending the system to other members of Balfour Beatty’s supply chain”.

Suppliers who sign up to the scheme will be able to access payments as soon as Balfour Beatty approves their invoice.

Once the invoice is approved, it is then automatically uploaded on to the bank’s internet platform.

The supplier can then log in and access their fast track payment – less a small interest charge per payment.

As an example, on a typical £100,000 invoice a supplier on 31 day payment terms would be able to receive a fast-track payment 14 days early for an interest payment of £127.

The interest generated will be used to cover the scheme’s costs and will not generate net income for Balfour Beatty.

Martin Chown, Procurement Director, Balfour Beatty Construction Services UK, said: “Balfour Beatty reinvests two thirds of its revenue in the supply chain and as such our own performance is underpinned by theirs.

“It is essential that we develop lasting, collaborative relationships with our supply chain and it is also the right thing to do.

“The scheme is voluntary and easy to sign up to. It is just one of the initiatives that we are committed to delivering in order to better support our partners, specifically the small and medium sized businesses we work with, ensuring they continue to prosper and grow alongside us.”

Nicholas Pollard, Chief Executive Officer, Balfour Beatty Construction Services UK said: “It is really important to Balfour Beatty that we take the supply chain with us and build even stronger relationships as we move forward with creative approaches to our customers’ opportunities.”

The finance scheme is being rolled out on a phased basis and will be open to all of Balfour Beatty’s UK suppliers within the next 12 months.

Carillion has introduced a similar scheme and other major players like Kier are also adopting the practice.

Supply chain partners who would like to become part of the Balfour scheme can register their interest by e-mailing supplychainfinance@balfourbeatty.com

 

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