A new common sense to survive the "waiting for payment" in civil engineering work|Financial strategy to extend heavy equipment leasing and fuel costs by up to 60 days

The "long tunnel until completion" that plagues the civil engineering industry and a new form of cash flow

"The site is moving, but the payment is three months away---- how should I pay for the fuel and lease during that time?"

If you are a civil engineering manager, you must have mentioned this problem at least once. Piecework payment for public works is certain, but the time to receive is long. On the other hand, heavy machinery lease fees and diesel fuel costs will definitely be billed every month. Even obtaining a bank loan takes a long time to review, and it is not possible to make it in time for sudden on-site mobilization and disaster recovery work----。

Invoice Card Pay byGMO is currently attracting attention as a new method of financing that eliminates the "time lag between payment and expenditure" unique to the civil engineering industry. By switching to a card payment for monthly fixed costs, it secures up to 60 days of payment grace and aligns finances with the public works payment cycle---- It is being introduced by civil engineering companies nationwide as an "aggressive financial strategy" that is different from bank loans.

Difficulty in securing "working capital" to support civil engineering sites

The reason why civil engineering work is difficult to finance is the industry structure itself.

In public works, "piecework payment (partial payment)" is made according to the progress of construction, and a system is in place that allows you to receive an advance payment (up to 40% of the contract amount) at contract times. In addition, according to the provisions of the Accounting Act, the period from completion of the inspection to payment is stipulated in principle within 30 days.

However, using these systems does not eliminate cash flow issues. invoice Including preparation, adjustment of inspection schedules, and paperwork, in practice, it often takes about 1 to 2 months from completion of construction to payment. On the other hand, the cost of moving the site does not wait. Lease fees for backhoes and bulldozers are hundreds of thousands of yen per month, and it is not uncommon for diesel fuel costs alone to exceed 1 million yen per month as the number of sites increases. Labor costs and outsourcing costs to subcontractors will definitely come out every month.

In other words, civil engineering management has an "upfront investment" aspect. Even if you use advance payments or partial payments, there will be a gap between the timing of expenditure and payment, so it is necessary to secure a certain amount of working capital with your own funds or loans when you receive a construction order.

Medium-sized businesses that operate multiple sites at the same time are particularly demanding. Paying the lease fee at site B while waiting for payment at site A and repaying the fuel cost at site C---- Such adjustments in cash flow occur on a daily basis, and managers spend a lot of effort on cash flow management.

Bank loans are of course an effective method, but the review takes time, and depending on the contents of the financial statements, the desired amount may not be approved. And above all, loans are suitable for "big investments" such as the purchase of large heavy equipment and capital investment, but it is not realistic to borrow over and over again due to fixed costs incurred every month.

Control payment of lease fees and fuel costs with BPSP to save cash

This is where invoice Card Payments (BPSP) comes into play.

This is a mechanism that allows you to extend the payment until the card debit date by using your own credit card to make a payment of invoice received from a business partner. GMO Payment Gateway (hereinafter referred to as GMO-PG) provides this service under the name "Invoice Card Pay byGMO".

The flow of this service is simple. With "Invoice Card Pay byGMO", GMO-PG will pay the business partner in advance in Bank transfer by the date specified by your company. This allows your company to defer your actual cash spend until a later credit card debit date.

The biggest advantage of this mechanism is that it can extend payment for up to 60 days*. For example, if you process a invoice received on April 10 by credit card, the actual debit will be from the end of May to the beginning of June. If the utility piecework payments are deposited during that time, you can complete the payment without reducing the cash on hand.
*Depends on the credit card closing date and payment date

More importantly, since the transfer is made in the company's name, the other party does not know that you are using credit card payment. In the civil engineering industry, long-standing relationships of trust are emphasized, so "Isn't it difficult to cash flow?" I don't want to cause anxiety to my business partners. With invoice card payments, they are treated as Bank transfer as usual, so you can optimize your financial strategy without compromising any relationship with your customers.

▼ Comparison of "Invoice Card Pay byGMO (BPSP)" and "Traditional Bank transfer"

Balancing Fees and Practicality

The fee for Invoice Card Pay byGMO is a flat rate of 3.0% (minimum fee of 1,500 yen). For example, if you extend the lease fee of 300,000 yen by 60 days, the fee is 9,000 yen. At first glance, it may seem expensive, but by thinking of this as a "60-day financing cost," its practicality for your company becomes clear.

Even if the interest rate on a bank's short-term loan is about 2% per year, it does not guarantee that you will be able to obtain funds at the necessary time due to the examination period and procedures. Even compared to other financing methods such as high-cost factoring (the market price is around 10%), the 3.0% fee is a cost for "mobility and certainty" that eliminates "waiting" such as bank loans, completes online without documents in principle, and secures cash flow on the same day at the earliest. If you think of this as a "safety valve to keep the site going," it can be said that it is a reasonable choice worth considering.

"Clever payment deferral technique" tailored to the public works payment cycle

What many managers are worried about is that even if the payment is confirmed, they are worried about whether they will have funds on hand during that time. Planned cash flow to eliminate this anxiety and not stop the site is the key to stable management.

For example, suppose you receive an order for a road repair work in April, complete it at the end of June, and receive payment at the end of August after a volume inspection. During this time, the monthly costs incurred are as follows:

• Heavy machinery lease fee: 400,000 yen per month ×3 months = 1.2 million yen
• Fuel cost (diesel): 800,000 yen per month ×3 months = 2.4 million yen
• Subcontractor outsourcing cost: 1.5 million yen per month ×3 months = 4.5 million yen

A total of 8.1 million yen must be repaid before payment.

Here, if you use invoice card payments strategically, you can design your cash flow as follows.

[May 10] invoice of heavy equipment lease fee of 400,000 yen arrives
→ Processed by credit card. Withdrawals are made from the end of June to the beginning of July.

[May 15] invoice of 800,000 yen for fuel arrived
→ Processed by credit card. Withdrawals are also from the end of June to the beginning of July.

[June 10] invoice of 400,000 yen for lease fee and 800,000 yen for fuel for June arrived
→ Credit card payment as well. Withdrawals are made from the end of July to the beginning of August.

In this way, by switching your monthly fixed cost payment to Credit card payment, you can push back your actual cash expenditure by 1-2 months. As a result, the payment can be completed at about the same time as the public works payment at the end of August, so in this case, the use of BPSP (Invoice Card Pay byGMO) avoided cash expenditures of up to 8.1 million yen until just before the payment, and was able to preserve the funds on hand as a safety valve in case of an emergency.

Of course, you don't have to switch all payment to credit cards. It is also possible to have a hybrid strategy in which outsourcing costs and labor costs to subcontractors remain Bank transfer, and only fixed costs such as heavy equipment leases and fuel costs are switched to credit card payments. Bank loans are used for the purchase of large heavy machinery and capital investment, and daily working capital is covered by BPSP (Invoice Card Pay byGMO---- This use is the key to stabilizing civil engineering management.

Speed to prevent shortages of funds during disaster response and sudden on-site mobilization payment

The civil engineering industry presents another unique challenge. That is sudden on-site mobilization.

Disaster recovery work caused by typhoons and heavy rains, and emergency repairs of road collapses---- In these sites, heavy machinery and personnel must be moved immediately upon request from the government. However, the payment of disaster recovery work may take longer than normal public works, and the cash flow will be even more difficult.

Even if you apply for a bank loan during such an emergency, it usually takes several weeks to review. In the meantime, the site starts to move, and the payment deadline for fuel and material costs is approaching---- This is the moment when the risk of "short-funding" increases the most.

While bank loans take weeks to review, Invoice Card Pay byGMO is available as soon as the same day, providing maximum mobility in emergencies where time is a race. Complete the three steps of "register as a member, enter your invoice information, and register your credit card" online to switch your invoice payment to Credit card payment in no time.

This mobility can be said to be the value of Invoice Card Pay byGMO in the civil engineering industry. In a situation where you can't afford to wait for a loan, having a means to control your cash flow is a great reassurance for managers.

GMO Payment Gateway Reliability – Peace of Mind Provided by Listed Companies

Because it is a service related to the lifeblood of a company, which is cash flow, the reliability of the provider is important.

GMO Payment Gateway is a TSE payment processing company company listed on the Prime Market. There are Actual that have supported a wide range of infrastructure of payments, including major e-commerce sites in Japan and CVS Payment and QR code payment.

"Invoice Card Pay byGMO" supports Visa/Mastercard issued in Japan. If you already have a corporate card, you can use it as it is.

The strict security standards unique to listed companies and the know-how cultivated over many years of payment processing business support the stability of the service.

Summary: Starting today, "offensive finance" to stabilize civil engineering management

Bank loans are effective for capital investment, but they lack the mobility to cover daily working capital. Invoice Card Pay byGMO is a new solution to this challenge.

By switching fixed costs such as heavy equipment leases and fuel costs to Card payment, you can secure up to 60 days of payment grace and align your finances with the utility payout cycle. Since the transfer is made in the company's own name to the business partner, there is no need to worry about damaging the relationship of trust.

The fee of 3.0% may seem high at first glance, but this is the cost of buying "certainty" and "mobility". During disaster recovery or sudden on-site mobilization, the ability to extend payment immediately without waiting for financing---- This peace of mind is a priceless value for civil operators.

Bank loans are for large-scale investments, and invoice card payments are for daily working capital---- This use is the "offensive financial strategy" that will stabilize civil engineering management in the future.

With a new weapon called Invoice Card Pay byGMO in hand, why not start a management system today that allows you to move the site with peace of mind?