“The TradeBridge facility helps us improve payment terms throughout our supply chain”
By Paul McCulloch
Support Services Improvement Manager | Osborne
Osborne is a family owned construction services business, ranked as one of the top 50 main contractors in the UK. Our core values – being open, caring and having a high level of integrity – are central to how we do business. We are trusted partners for our clients and throughout our supply chain network.
We are a diverse company that works across various sectors including:
The value of subcontractor relationships
Compared to many large construction businesses, we’re flexible in our approach and can adapt quickly. Our business liquidity has been a major factor in helping us achieve this.
There has been a squeeze on finance in the sector recently, with an industry shift towards lowest price bidding.
As a company, we have managed to avoid this by being selective. We focus on delivering value and quality rather than being hamstrung to a lower price. Our trusted supply chain comprises companies that are experts in their own field. By securing these valuable relationships, we win a lot of repeat business from clients looking for a specific skill-set and quality of delivery.
Improving subcontractor payment terms
Managing cash flow and the payment cycle is a challenge for most main contractors. Typically, construction firms operate on low margins compared to other industries. Without a tight focus on cash management, especially in construction, you run the risk of your business running out of cash.
As a company, we’re committed to improving and reducing payment terms throughout the supply chain, as evidenced by our commitment to the government’s Prompt Payment Code. This can be a challenge, but the types of finance available are slowly evolving. With TradeBridge’s supply chain finance programme, we have found a way to strengthen subcontractor relationships without compromising our cash position.
Initially, we looked at supplier earlier payment programmes through banks. But we found that a lot of programmes had a poor reputation: costly to the supply chain; complicated to set up; placing added liabilities onto sub-contractors.
We were keen to find something that was simpler, affordable and not onerous for our sub-contractors.
Supporting our supply chain
TradeBridge offered a supply chain finance facility that was flexible for our needs. It has helped us build stronger relationships with some of our supply chain with a core of subcontractors who value it and are repeat customers every month.
We use the facility to support our sub-contractors cash flow in an affordable way so their own businesses can thrive, and they can continue to perform well for us.
Some of our bigger sub-contractors don’t feel they need to use the facility as they are financially secure. However, it only takes one bad customer to refuse to pay to potentially give you a short-term cash issue. The TradeBridge early payment facility is there as an emergency button to push if ever our sub-contractors need it.
Liquidity, innovation and business growth
Supply chain finance, when used strategically, reduces many of the stresses and strains related to cash that can stunt business growth. We’re proud that Osborne is hugely innovative in the sector, looking constantly at both new construction techniques and approaches.
Our continued success is evident in the way our business continues to grow.
We’re excited about what the future has to offer. In conjunction with the strong relationship we maintain with our bank, supply chain finance offers us the level of liquidity needed to make strategic decisions about growth without negatively affecting our cash position or working capital
How could a facility of 500,000 – 10 million support your supply chain? Get in touch for your free working capital review.