As a subcontractor, you’re no stranger to relationship management. You have GCs and owners to consider, but so much of your ability to successfully complete projects depends on having reliable material suppliers. But have you ever thought about the supplier’s perspective on the other side of the deal? How they think, what makes them tick, and where you stand with them— not just in crunch times, but throughout the year?
Understanding your supplier’s viewpoint can be incredibly useful for strengthening your working relationship. At Billd’s October 2024 Subcontractor Meetup, Josh Tinaglia of BayWa shared what suppliers value in a subcontractor relationship. In this article, we’ll explore Tinaglia’s take on supplier-subcontractor partnerships, including how they prioritize relationships and insights that can help make you your suppliers’ favorite customer.
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How Suppliers Prioritize Customers
Suppliers constantly find themselves in the difficult position of having to choose which customers they’ll serve first. This decision-making process is complex and goes beyond just transaction history.
Here are some criteria suppliers use to evaluate their existing relationships with subcontractors when making these decisions:
- Communication – Customers who maintain open, clear, and consistent communication channels are often prioritized.
- Payment History – Timely payments show reliability and financial stability, making these customers more attractive.
- Accurate Forecasting – Customers who provide accurate forecasts help suppliers plan better, making them valuable partners.
- Mutual Understanding – A history of mutual support and understanding will strengthen the relationship.
All of these are anchored in a theme of consistency. Long-standing, stable relationships are naturally more valuable. Suppliers may prioritize these customers because they help them mitigate their risk.
According to Tinaglia, “We’re looking at our pipeline saying, ‘Contractor ABC, they pay on time, they do pretty good forecasting. That’s an easy yes. On the other hand, some other customers might be slow paying or don’t give us accurate forecasts.’ That unpredictability makes it really hard for us. So the more unpredictability there is in the general market, the more we have to look at predictability within our customer base and their ability to communicate with us.”
Strategies to Become a Priority Customer
To strengthen your standing with suppliers, consider trying these strategies:
1. Enhance Your Communication
Proactive and transparent communication is key. As a subcontractor, you should:
- Regularly update suppliers on project timelines and potential changes
- Establish your best point of contact for each supplier relationship
- Be responsive to supplier inquiries and concerns
2. Refine Your Payment Practices
As a sub who’s probably used to slow pay, nothing speaks louder than timely payments, so consider:
- Setting up automated supplier payments
- Communicating clearly about any payment issues or delays
- Paying upfront and in full with a solution like Billd material financing to avoid issues or delays
3. Forecast Accurately
You can improve your forecasting by:
- Using a strong project management software for more accurate forecasts to share with your supplier
- Regularly reviewing and updating your material needs as scopes, schedules, or budgets change
- Communicating any significant changes in demand as early as possible
- Designate a process to ensure suppliers get this kind of information as quickly as possible, with minimal delays
4. Seek Strategic Partnerships
Don’t just make transactions, make your supplier a true partner to your business. Beyond landing high on their priority list, it can help you tap into a bird’s eye view your suppliers have on the market due to working with so many other subs.
Additional ways to move beyond transactional relationships include:
- Sharing forecasts and being communicative
- Speaking with your supplier before you agree to take on a larger project
- Having face-to-face meetings when possible
- Sharing your project schedule to inform them of future materials needs
- Offering them insights into market trends from your subcontractor perspective
- Consider sharing what kind of messaging you think would resonate with other subs
- Clue them into what you think subs are really looking for
5. Demonstrate Loyalty
While it’s important to have multiple suppliers, showing loyalty can pay off. Consider:
- Consolidating purchases with fewer suppliers where possible
- Providing testimonials or case studies for your top suppliers
- Recommending reliable suppliers to other subcontractors in your network
Why Avoiding Terms Can Help Your Supplier Relationships
Subs and suppliers endure plenty of unpredictability when it comes to project payment timelines. Despite the fact that so many subs use supplier terms, terms can actually contribute to that unpredictability. Subs are rarely able to pay invoices after 30 day terms, since they’re not getting paid on time by the GC. This means the supplier invoice has to go unpaid past the 30 day mark, or the sub will have to use their own cash to cover the invoice while waiting for payment from the GC. They may also run into the problem of maxing out their credit with the supplier while waiting for payment, which can cause a snag in project delivery. Any way you slice it, terms can get messy for all involved.
If you consistently allow your suppliers to fall dead last in the payment chain, you could tarnish your relationships with your suppliers. Late payment alone might not jeopardize your relationship if you’re communicative about it, but if you can help it, why wouldn’t you?
How Billd Helps You Pay Suppliers Upfront and In Full
Financial solutions like Billd are an additional working capital option that allows you to better manage your cash flow and maintain strong relationships with suppliers through prompt payments. Billd allows you to pay your suppliers upfront and in full. Then, you get up to 120 days to pay Billd back, giving you 4x as much time to get paid by the GC. Additionally, many suppliers will offer a 1-5% discount when you pay in full
With all of these strategies in mind, take the time to evaluate your current supplier relationships. Are you positioning yourself to be a priority customer? Are there areas where you can improve? By applying the insights we’ve shared, you can work towards becoming the kind of customer that suppliers truly prioritize
If you took away valuable insights here, you’re only getting a taste of what was covered in Billd’s October 2024 Subcontractor Meetup. To watch the full Meetup on demand, visit billd.com/webinar/the-truth-about-subcontractor-supplier-relationships/
