27 April 2006 | Anusha Bradley
Lloyds TSB Commercial Finance and JP Morgan have launched a payment system that they plan will improve supplier relationships.
The as-yet-unnamed system acts as a third-party payment service between buyers and suppliers. Fees are charged per transaction and can be based on borrowings established between purchaser, supplier and the new system.
Lloyds and JP Morgan will pay suppliers on the date they choose, while allowing buyers to lengthen payment terms. They claim this will improve cash flow and profit margins for both buyers and suppliers.
"It is aimed at large corporate buyers who want longer payment terms but also want to protect their supplier relationships," Jeremy Shaw, JP Morgan's head of trade finance, EMEA, told SM
The system has been used in the US and Europe for several years. Shaw said recent headlines about payment times meant it was the right time to bring it to the UK.
"Suppliers are feeling squeezed and want to be paid earlier. This enables buyers to keep suppliers happy."
The system, which can be integrated into a firm's e-procurement or ERP system, will be rolled out over the next 18 months.