In an industry where financial challenges frequently plague the supply chain, Saible aims to make significant strides with its recent funding. By securing £2.9 million from angel investors, the UK-based construction fintech company is set to expand its innovative solutions to alleviate late payment issues that have long troubled the sector. Saible’s timely technological advancement seeks to change how funds are managed, ensuring that payments reach all tiers of the supply chain without delay.
Over recent years, numerous construction entities have faced financial hurdles, with a marked rise in insolvencies. According to research by Menzies, construction has led insolvency statistics across UK industries annually. This paints a challenging backdrop against which Saible’s new financial model is launched, enabling smaller firms potentially to escape the vicious cycle of delayed payments.
What is the Problem with Current Payment Practices?
Traditional payment methods in construction can see funds held up or used as unofficial credit lines by larger contractors. This situation severely impacts smaller subcontractors who often suffer from cash flow issues and may even face insolvency. The DiPPA platform by Saible ensures each player receives payment directly and swiftly, thereby mitigating risks associated with systemic delays and financial instability.
How Does Saible Aim to Solve These Issues?
Saible’s technology intervenes by using Digital Parallel Payment Accounts (DiPPAs), which facilitate smoother transactions by ensuring funds are distributed to all approved firms within a project simultaneously. The use of a trust-based mechanism with their banking partner Griffin, ensures trust and financial transparency throughout the process. Unlike project bank accounts, DiPPAs are intended to provide comprehensive coverage across the entire supply chain.
Jarvey Moss, the co-founder and chief executive of Saible, stated:
“Late payment in construction goes beyond the balance sheet. It creates pressure that runs through businesses, workers and families. When firms are waiting months beyond agreed terms, people are left worrying about whether they can pay staff, suppliers, and themselves.”
The pilot projects, including partnerships with entities like the Environment Agency and BAM Nuttall, are steps toward implementing effective change. These initiatives aim to test Saible’s payment models under real-world conditions in public-sector construction. The outcomes could serve as templates for legislative reforms aimed at resolving industry-wide financial disorders.
Phil Brown from Causeway Technologies remarked:
“Saible is different because it gives clients and contractors a practical way to make sure money reaches the firms doing the work, not just the businesses at the top of the chain.”
Saible’s approach distinguishes itself by not charging the firms in the supply chain, levying a minor fee only on project owners, appealing to smaller businesses that have borne the brunt of ongoing payment disparities. By facilitating investments through Crowdcube, Saible opens doors for construction SMEs to actively participate in solving the systemic problem and, potentially, improve their financial resilience.
As the construction industry evolves, initiatives like Saible’s DiPPA provide a potential model for managing cash flow issues more effectively. Beyond improving immediate financial logistics, such initiatives could serve as blueprints for broader systemic changes. As Saible garners more attention and investment, the impact on the industry may reach well beyond the bounds of its current projects, potentially setting new standards for payment practices in construction.
