In this guide, we'll explain exactly how building material credit works, who can apply and what flexible options are available to UK construction businesses. You'll find out how building material credit can help your business, saving you a lot of time and hassle.
0
min read
Buying building materials on credit can be a lifeline for businesses when it comes to managing cash flow.
Whether you're a local builder or a nationwide construction firm, having access to a credit account lets you start jobs before payments come in, smooth out your cash cycle and secure the supplies that you need exactly when you need them. No more unnecessary delays.
Put simply, building material credit, or a trade credit account, lets builders and contractors buy their material and pay for them later. Typically, you would arrange it through a supplier who would agree to give you a set credit limit and payment terms, which are usually either 30 or 60 days.
In practice, it works like this:
This is a really straightforward process, which will help you to keep things moving, especially if you are working on multiple or long-term projects that require a wide range of materials that you'll need at different times.
Being able to use credit to purchase building supplies can help your business in many ways. For a start, it will help to ease cash flow pressure. You don't need to wait for payment from your client before you can start preparing for the job. You can get materials in place so that once the job’s confirmed, you’re ready to go. It may also mean that you can afford to use higher quality products in your work.
This means that you can start jobs sooner. There is nothing more frustrating than having to wait around for cash before you can make a start. You have so many things to juggle, like staff and contractors who may have limited availability, so not having to worry about when you can get the right materials just gives you one less thing to worry about. Once you have the go-ahead, you can get started straight away.
You can also negotiate better rates with your suppliers, as you will have the capacity to buy your supplies in larger quantities. Using credit can open up discounts than when you are buying as-and-when you need various materials. It also makes it easier to track your expenses, when you get one invoice from your supplier at a fixed length of time. You'll know exactly where you stand, and be able to make forecasts for your business.
All of these benefits come at no extra cost if you choose an interest free credit option.
Most UK suppliers and digital lenders will offer credit accounts to a wide range of customers, including:
To apply for building material credit, you'll usually need to complete a credit application form and provide some basic business details, like:
It's useful to have all of these to hand when you apply. Providers will then offer you credit subject to a soft credit check to assess your risk level, and then decide on a credit limit for you. Some smaller providers may offer you a lower limit without performing a check - have a look around at different options to see who can offer your business exactly what it needs.
Opening a credit account may be a lot more straightforward than you imagine. Here's how it usually works:
As long as you stay on top of the payment due dates, your credit rating will get better and better, which will lead to a larger credit limit. This is perfect for a growing business.
While traditional supplier accounts are still widely available, more and more businesses are turning to digital credit solutions like iwocaPay and Hokodo. Platforms like these are designed specifically to support B2B transactions, offering a fast, flexible alternative to traditional trade accounts. Many businesses find that these digital options offer a more modern, slicker service.
Here is a quick comparison table:
With solutions like iwocaPay, builders are able to buy the materials they need without any delay, and suppliers will get paid instantly. You save time, and projects keep moving, with no worries about cash flow.
It may not be the most exciting topic, but building material credit can transform how your construction business manages cash flow. By delaying payment until you have been paid, you can keep projects on track, access a huge range of supplies and avoid stretching your working capital.
Whether you decide to opt for traditional accounts or a digital solution like iwocaPay, the right credit account makes buying materials easier, faster and safer. What that means is that you spend more time doing what you do best, and less time worrying about invoices.
