Balfour Beatty and Carillion pledge supply chain boost
Balfour Beatty and Carillion have signed a new agreement with the government which will allow banks to speed up their suppliers’ payment terms.
The two are joined by a number of high-profile UK firms, including Babcock International, Tata Steel and Marks & Spencer, who have agreed to “actively evaluate” the implementation of, or continuing support for, ‘Supply Chain Finance’.
The scheme will see Balfour Beatty and Carillion notify banks that that an invoice has been approved for payment; the bank is then able to offer a 100 per cent immediate advance to the supplier at lower interest rates, knowing the invoice will ultimately be paid by the large company.
Prime minister David Cameron said: “This government is determined to back all those businesses who aspire to get ahead and take on more people.
“In the current climate, viable businesses can struggle to get the finance they need to grow – this scheme will not only help them secure finance and support cash flow, but will help secure supply chains for some of our biggest companies and protect thousands of jobs.”
The government said that the scheme could help to deliver up to £20 billion of new cheaper, finance to their suppliers, including many SMEs.
Federation of Small Businesses national chairman John Walker said: “The new Supply Chain Finance scheme could help smaller firms in two key areas – improving their working capital and tackling the issue of late payments. Nearly three quarters of small businesses report that they have been paid late in the past year, placing a huge strain on cash-flow and meaning they struggle to realise ambitions to grow.”
CBI director for competitive markets Matthew Fell said: “Boosting the use of supply chain finance is an innovative way to ease the funding squeeze for many smaller businesses, but it is dependent on the nature of individual supply chains to work effectively so is not a one size fits all solution.”
The following companies have agreed to this commitment: AB Foods; ASDA; Atos; Babcock International; BAE Systems; Balfour Beatty; Boeing; BP; British Airways; BT; Capgemini; Carillion; Centrica; Dell; Diageo; EDF Energy; Finmeccanica; General Dynamics UK; GKN; GSK; Home Retail Group; HP; IBM; J Sainsbury; Jaguar Land Rover; Kingfisher; Lockheed Martin UK; Marks & Spencer; MBDA; O2; Rolls-Royce; Serco; Siemens; Statoil; Tata Steel in Europe; Tesco; Thales; Vodafone.