Birmingham City Council invests half a million pounds in new low cost funding solution for SME suppliers
Birmingham City Council has announced that it has made a £500,000 investment in a solution that offers its small to medium sized business suppliers access to finance quickly and more cheaply than generally available.
The City Council has taken a stake in supply chain finance specialist, Obillex, which it recently appointed to provide a new supply chain finance technology platform. Birmingham, the first local authority in the UK to sign up to Obillex’s proprietary solution, has been attracted by its potential application in large buying organisations across the country and the boost it can give to local, regional and national economies.
The Obillex supply chain finance system leverages the City Council’s creditworthiness to attract funding from investors to allow rapid payment of suppliers’ invoices. The cost of the finance is kept low as investors are willing to take a small return on each transaction due to the potential high volumes involved and the low risk based on the Council’s good credit rating.
Suppliers with new or ongoing contracts with the Council are onboarded to the service simply by communicating this request through their relevant contract managers within the Corporate Procurement Services division of the City Council.
Cllr John Clancy, Leader of Birmingham City Council, said: “We recognise that SMEs are the lifeblood of the Birmingham economy so are fully supportive of anything that helps such businesses flourish.
“The product we have trialled, developed by Obillex, helps ensure our supply chain gets paid as quickly and efficiently as possible, stimulating economic growth and helping generate or protect jobs in our communities.
“Given we believe so strongly in the potential of this product for other local authorities and large corporate organisations, we are delighted the Finance Birmingham mechanism is being used to support its development and future success.”
Paul Dransfield, deputy chief executive at Birmingham City Council, added: “We appointed Obillex because we recognise the benefits their solution brings to our SME suppliers and the city and wider region by making funding more accessible and affordable.”
“On the back of this appointment, we have gone one step further by investing in the business directly as there is the potential to roll it out across other local authorities and large corporates, thereby offering the same benefits on a larger scale across the West Midlands and the UK. It means we can play a key role stimulating economic growth, helping to generate jobs in our communities. Once people see it working here in the West Midlands we believe it will attract significant interest amongst the biggest public and private sector organisations in the UK, that are proactively looking for a cost-effective way to identify and support the SMEs in their supply chains within their local communities.”
Nigel Kletz, Head of Procurement for Birmingham City Council, commented: “The Obillex Solution can work seamlessly between the finance systems of buying organisations such as Birmingham City Council and suppliers’. Significantly it will mean that an SME supplier to the Council or one of its participating contractors can simply press a button to process their invoices through a digital environment. It is an important objective for Birmingham City Council and other large buying organisations to improve supply chain liquidity and the social value benefits that arises. ”
The Council values the continuing assistance from notable strategic collaborators in Obillex such as Bank of New York Mellon.
Obillex Chief Executive Damian Crowe welcomed Birmingham City Council’s investment, “This is a hugely important commitment from the Council, and a significant recognition of the potential offered by our supply chain finance technology solution and collaborative model. It also sends out a positive statement to local people that their Council is investing in the future wellbeing of their communities by providing critical funding support for small to medium sized businesses.”
The £500,000 investment was managed by Finance Birmingham, a national provider of funding to SMEs, which is supporting Obillex as the company rolls out its platform. The investment has helped to encourage Obillex to base its business in Birmingham, and create eight new jobs in the city to date.
Sam Miller, Investment Director at Finance Birmingham, added:
“Finance Birmingham is responsible for helping SMEs along the supply chain, which need to access funding that traditional lenders won’t provide. Obillex is the perfect fit for this strategy. We have been working with the firm for several months, and will continue to support Obillex as its platform is rolled out.
“By enabling SMEs to be paid early or on time and in full, the company is creating greater liquidity amongst local firms and boosting their working capital reserves. In the West Midlands alone there is an estimated SME turnover of £128bn [Source: ONS]. Using £128bn turnover as the starting point and assuming receivables in line with the all-UK company average of 49.5 days (source: Grant Thornton, Capital Thinking issue 5), that would suggest over £17bn of cash is locked up in trade receivables across the region”. Obillex’s platform has the potential to unlock billions of this working capital into SMEs within Birmingham City Council’s supply chain – helping those firms to innovate, invest in growth and recruit more staff – making it an opportunity we could not miss.”
Birmingham has a reputation for welcoming the growth of SMEs and start-ups. It has been named the UK’s entrepreneurial hotspot, with over 18,000 new companies registering in the city during 2014 – more than any other regional location, according to StartUp Britain. The number of incubator and accelerator programmes in the city has doubled in the past two years, research by Telefonica shows.
Former head of UK Government Procurement appointed to the board of Birmingham-based business finance solutions provider
Former head of UK Government Procurement appointed to the board of Birmingham-based business finance solutions provider
Nigel Smith, former Chief Executive at the Office of Government Commerce (OGC) and Second Permanent Secretary in HM Treasury, has joined the board of Birmingham-based business finance solution provider Obillex to help the company shake up the supply chain finance market in the private and public sector.
Smith is currently a non-executive director of Sepura plc, a global leader in the supply of TETRA and DMR digital radio products and services and a non-executive director of Sellafield ltd, the nuclear decommissioning, reprocessing and waste management site license authority. He is also an advisor to HM Treasury on Major Programmes.
He was formerly Chairman of data analytics business Spikes Cavell , President of multi-national Invensys Rail Systems and Chief Executive of Charter plc, a major British engineering business.
Whilst at the OGC, he was responsible for leading the drive to modernise government procurement and deliver value for money. His responsibilities included setting out a clear procurement framework that all government departments could follow, as well as managing the relationship with government’s key suppliers across some of the country’s largest projects. At the OGC, he spearheaded major initiatives transforming collaborative procurement activity and capability across Whitehall. His strategic focus resulted in significant efficiency and value for money savings being achieved in the public sector.
Smith was once described by Sir Gus O’Donnell, former head of the Civil Service, as an “excellent leader” who had “a positive influence on the way government departments procure goods and services.”
On the new appointment, Damian Crowe, chief executive of Obillex, said “We aim to shake up the business finance market by making it possible to get money into the hands of SME suppliers quicker and at a lower cost than ever before, providing vital working capital for them to thrive and grow. Nigel’s background will be key to helping achieve our vision of establishing supply chain finance as every day finance and not a last resort source of high cost cash.”
Smith added: “The environment for game-changing business finance provision is ideal particularly as the government is looking to clampdown on late payment, which is widely acknowledged to have cost UK businesses over £40bn in the past year alone. Obillex provides something really innovative in a marketplace which has been dominated for too long by high cost bank finance. I am looking forward to supporting the growth ambitions of the company and finally providing an effective solution and support to the vital SME sector of the economy.”
Through its unique financial instrument, Obillex has focussed on addressing the critical issue of accessing finance as quickly and cheaply as possible. Its solution leverages the credit worthiness of big business and public sector buyers to draw in investors, who attracted by the low risk involved put up funds that enable almost instant payment of an invoice in exchange for a small fee.
Hidden bank fees land UK business with £425m bill
“UK banks are charging businesses that need short-term finance £425m a year in “hidden” extra fees, according to research.” 21st April 2015
Obillex secures £3m investment
London, 17 November 2014. Early payments finance technology business, Obillex, has secured £3m funding, led by Dawn Capital and supported by MMC Ventures, to underpin and accelerate Obillex’s product development and roll-out in the UK.
The financial services industry is currently undergoing great disruption, and supply chain finance is no exception. The Obillex platform has been developed over the past three years in recognition of the pain points felt by businesses in the current supply chain finance transaction market. Obillex provides a new solution for organisations to rapidly settle supplier invoices, and is suitable for businesses of all sizes across both public and private sector. The patented solution, which works by linking multiple participants to supply chain finance transactions, also provides significant benefits to business stakeholders such as capital market investors and e-invoicing providers.
Dawn Capital, supported in the round by MMC Ventures, is investing £3M to support Obillex’s further product development and rollout in the UK. Josh Bell, Partner at Dawn Capital will join the board of directors.
Josh said, “Dawn Capital is always looking for novel and cutting edge new FinTech solutions. Supply Chain Finance is a sector ripe for innovation and we believe Obillex’s proprietary product and strong team are well-placed to win in this market.”
Jon Coker, Partner, MMC Ventures, said, “Obillex is building its UK presence at time of change in supply chain finance – making the opportunity to invest and support the company all the more exciting. We’re looking forward to working with Damian and his team and to watching the company’s next stage of growth.”
Alan Morgan, Chairman, Obillex, said, “We think there is an opportunity to enable institutional finance to participate directly in funding suppliers. Obillex aims to enable this process and we are delighted that Dawn Capital and MMC Ventures have backed us in this development.”
Obillex’s founder Damian Crowe is delighted to welcome Dawn Capital and MMC Ventures as shareholders. He said, “It’s exciting to have such experienced investors joining our team and to know that Obillex now has the runway to deliver our business system into the market and to be able work closely with our existing clients and partners to develop capabilities consistent with the structural changes taking place in the market.”
President Obama Announces New Partnership with the Private Sector to Strengthen America’s Small Businesses – The White House, July 2014
“SupplierPay builds on the success of the Federal Government’s QuickPay initiative, which President Obama launched in 2011. QuickPay requires federal agencies to expedite payments to small business contractors with the goal of paying within 15 days. As a result of QuickPay, we have already seen well over $1 billion in cost savings for small businesses since 2011, leading to greater investment and job creation. SupplierPay is the private sector’s equivalent, where companies have committed to pay small suppliers faster or help them get access to lower cost capital.”
Small Business, Enterprise and Employment Bill
“The main elements of the Bill are: To make it easier for small businesses to access finance; improve payment practices between small businesses and their customers; providing small firms with fair access to the £230 billion spent each year in the form of public procurement contracts; and increase the availability and sources of finance for businesses that want to invest.”
Prime Minister announces support of SCF
“Prime minister David Cameron urges leading UK businesses to help improve cash flow in their supply chain with a new finance scheme that could see £20 billion in funding released more quickly.” 23rd October 2012
Obillex gets in on the ACT
Obillex Ltd has successfully applied to be a corporate member of the Association of Corporate Treasurers (ACT).
The ACT is the leading professional body for international treasury, providing the widest scope of benchmark qualifications for those working in treasury, risk and corporate finance. It defines standards, promotes best practice and supports continuing professional development.
Said Damian Crowe, Chief Executive Officer of Obillex: “As a business that offers a finance solution to those working in treasury departments it was vitally important that we are very much part of the profession’s community and the ACT is the ideal vehicle for this.”
“We want to become the standard bearers of supplier finance as the industry continues to grow on the back of the Government’s call for alternatives to bank lending in order to get the economy moving in the right direction again. In doing so we want to play a key part in educating treasury professionals on supplier finance opportunities.”