Cases · Case detail
How an installation firm bridges the main contractor's payment term
An electrical installation firm works mainly as a subcontractor for large installers and building contractors. The fitters are paid every month, the main contractor only much later. With factoring from SOOF Finance, the payroll no longer runs ahead of the cashflow.
The situation
You pay up front for work that was finished long ago
The business covers electrical engineering across the board: refurbishment, commercial property, security, fire alarm systems, solar panels and charging infrastructure. The work comes in largely through large installation firms and contractors, a familiar pattern in construction and infrastructure.
That model has a pleasant side and an awkward one. Where exactly it goes wrong is set out in working capital in construction and infrastructure. The order book is full. It is just that the main contractor decides when payment happens.
"My fitters are on site and get their wages at the end of the month," Erik says. "The main contractor pays me once he has his own stage payment in. That slips, and I am the one in between."
Then there is the materials side. Solar panels and charging points are not small items. "With a roof full of panels I buy in first. That amount sits open with me for months before anything comes back."
The result was that growth started to chafe. "You can take on a bigger job, but then you have to be able to carry two months of wages and materials. At some point you say no to work you are very good at."
The approach
Finance that follows the rhythm of construction
At the bank it came unstuck on the age of the company. The owner has experience in abundance, but the run of figures for the limited company was short.
"That is galling. You have been doing this trade for years, and on paper you still start at zero."
SOOF Finance looked at something else: at who had to pay the invoices. "That conversation was about my clients. Big names that pay slowly, but do pay. That turned out to be exactly the point."
How it works
The full receivables book transfers. He submits his invoices, SOOF pays out a large part of them straight away, and the main contractor pays later on the agreed term.
Because the work runs on stage invoices, the advance is matched to those. In construction and infrastructure that is the normal way of things, and the arrangement is set up for it.
The receivables management transferred with it. "I no longer had to argue with a main contractor's planner about an unpaid invoice. That is a good deal more comfortable for the working relationship."
The results
ReviewsReviews
What others say
Through working with SOOF, we are strong in more than just foundation work.
The onboarding was well organised. A simple process with fast payment.
We are very satisfied with what they offer, the way they work and the speed of payment. On top of that they think along with us actively and are always easy to reach. The contact is pleasant and professional.
We grow seriously every year, but finding suitable finance for a young business turned out to be hard. From the first contact with SOOF: short lines, pointed questions, quick to move. My feeling straight away was that they understand entrepreneurs here.
SOOF responds to the growing capital need in automotive. Vehicles on their way to their final destination are advanced against efficiently, so that we keep enough working capital to keep growing. Short lines, quick decisions, and a relationship that goes further than the transaction.
Erik
Eigenaar van een elektrotechnisch installatiebedrijf, regio Haaglanden
"We are very satisfied with what they offer, the way they work and the speed of payment. On top of that they think along with us actively and are always easy to reach."
"The biggest difference is that I no longer have to work out whether I will make the month. I plan around work, not around my bank balance."
"And I can now take on a bigger job without the materials costing me money for months first."
Frequently asked questions
Yes. Your invoices on the main contractor are simply receivables. We assess that book and match the advance to the way you invoice.
Yes. We go through what your project invoicing looks like and set the arrangement up around it. In construction and infrastructure, stage invoicing is the normal way of things.
Then we map that out in advance. We assess your book per customer, so that you know what headroom you get before you sign. What else a financier looks at is set out in five questions a working capital financier will ask you.
You can hand the receivables management over. We agree in advance how that happens, because your relationship with the main contractor is a commercial interest.
The situations in our cases come from our own practice. We publish them anonymised: names, companies, amounts and other details have been changed, so that a case cannot be traced back to an individual client. Working capital is client data, and we keep that confidential. A case describes one situation and says nothing about the outcome in your case.
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