The Chamberlain News

Council ramps up pledge to make 2016 the year of small business investment

Birmingham city council is on course to invest more in the small and medium-sized business sector during 2016 than at any time in the past, new leader John Clancy has indicated.

Underlining his determination to fulfill a leadership manifesto pledge to boost SMEs, Cllr Clancy has announced a £500,000 investment in a solution that offers business suppliers access to finance quickly and more cheaply than is generally available.

The 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 exploits the 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.

In the contest for the council leadership last month Cllr Clancy said he regarded businesses as “key builders of wealth and key fighters of poverty too”. He added:

Every business in every place in the city should be part of our joint Birmingham enterprise. Small and medium-sized businesses, especially, need to thrive, and increasingly micro-businesses and small and sole traders in every place need our pride, our support and our partnership.

Financial and Commercial Services and attracting major employers and businesses are key to building our city and we have done that well. But we have not yet begun to build an all ward strategy of smaller business growth to complement this. We must do so and show that every business matters to this council.

Commenting on the Obillex deal, the council leader 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 to 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.

Obillex chief executive Damian Crowe welcomed the council’s investment:

This is a hugely important commitment, 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.

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. 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.