Travis Perkins, the UK’s largest distributor of building materials, has been helping build Britain for over 200 years. Today, their supply chain network consists of over 6,000 suppliers, which provide everything from materials to build skyscrapers, to a simple pot of paint to decorate.
In 2018 alone, Travis Perkins dealt with over four million invoices.
“If we didn’t have a strong supplier network, we wouldn’t have a business with products to sell to our customers”, says Graeme Barnes, Director of Capital Markets, Travis Perkins.
Like many large corporates, Travis Perkins has excess cash around the business and the returns it was getting by depositing its cash in the market were low. In search of an alternative short-term investment solution, they partnered with C2FO, a dynamic discounting, early payment platform. The C2FO early payment platform allows Travis Perkins to funnel liquidity to its suppliers by paying their invoices early, simultaneously earning returns from the discounts on offer from the suppliers.
Matt McQuillan, Managing Director at C2FO, explains how Travis Perkins recognised that they could flip the traditional risk reward calculation by using some of their liquidity to invest in their supply chain and get a high return with zero risk, while helping their suppliers in a very ethical way.
“You typically have cash within the business at any time, therefore it’s really efficient for us to use that cash helping our suppliers by paying them early, which in turn helps their own funding cost — typically cheaper than other means”, explains Graeme.
In the first six months of using the system, Travis Perkins paid over 40 million pounds worth of invoices early to its suppliers. Another direct benefit of cashflow-rich suppliers is their ability to drive innovation.
“If we want to grow our business, we equally need them to grow their business at the same time”, adds Graeme.
Colin Sharp, SVP EMEA, C2FO, explains the importance of liquidity throughout the supply chain, as buyers greatly rely on their suppliers to drive innovation for the whole industry.
“What we see is that many corporates are deriving the innovation from their suppliers, particularly small suppliers in their supply chain. In order to make those changes, they need cash, they need liquidity, they need working capital to fund those innovations”, says Colin.
Travis Perkins and C2FO are featured in the Credit Experts programme, produced by the Chartered Institute of Credit Management (CICM) and ITN Productions. ‘Credit Experts’ showcases industry leaders, innovative technologies and best credit management practices in supporting business success and the wider UK economy.