Under an early pay scheme suppliers pay a fee to have their invoices settled early with payments coming direct from the bank rather than the main contractor.
Alternative lending specialist Nucleus Commercial Finance says that its new service is the first early payment schemes for medium-sized contractors.
“These early payment schemes have proved very popular with both contractors and suppliers alike,” said Nucleus managing director Chirag Shah, “but they have been limited in their scope.
“We believe that medium sized contractors with turnovers of over £20m should also have the opportunity to offer early day payment schemes to sub-contractors.
“Medium sized contractors often feel under-served by their banks, which is where we come in – Nucleus can set-up and run these schemes for them.”
Chirag said that suppliers liked the scheme because it gives them a guaranteed cash flow and certainty of payment. “Main contractors also benefit from a more predictable cash flow while they can build better relationships with trade contractors by offering them favourable terms.”
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