Checks are a form of payment that date back to the 11th century. That’s pretty old for any process to subsist with minimal change!

The construction industry is struggling with being staid and therefore is somewhat unappealing to young people. It’s an industry that even predates checks!

And yet, contractors still rely on paper checks sent though the U.S. Mail to get paid. Why?

At BuildPay, we’ve been in your shoes. We’ve worn the steel toe boots and camped in customers lobbies to get the 66 day late (US average) check owed. We know exactly why payment issues are an embedded struggle that can be expected, much like bad weather can be expected. Late payments, non-payment, cash-flow struggles, limited trade credit at material providers – you name it, we’ve seen it.

And it does not make any sense!

So, we’ve set out to build a payment platform to replace the incentives for your customer (no matter where they are in the payment chain) to withhold its antiquated check and replaced it with modern, financial technology that demolishes checks once and for all. Our financial technology enables every participant involved on a project to be paid directly from the funding institution supporting the project. But we also know that everyone in the project payment chain has an obligation to control payment release to others in order to assure quality performance. Checks are not only inefficient and ineffective in improving project productivity they are also an increasingly easy target for bad actors to get access to your bank account.

But don’t take it from us.

The National Automated Clearing House Association (NACHA), the agency that processes most paper checks through the Federal Reserve says that, “the most effective way to safeguard bank account numbers is to stop using paper checks”. BuildPay’s financial technology enables funds to be pass in one secure step to its final destination without revealing your bank account numbers to nefarious characters lurking between your printer, the mailbox and its final destination.

(Read: use BuildPay)

Ready to ditch your paper checks? #GotPaid #PayWhenPaid #PayBeforePaid

What is BuildPay?

BuildPay uses financial technology that connects the entire payment chain, enabling fast, direct payments, quicker build times (encouraged by better payments), and better material pricing (made possible by guaranteed payments). Construction the way it should be. #GotPaid

Ready to make construction great again?

Lenders: Competitive Advantage

The golden rule sums up lenders’ advantage the best. “Whoever has the gold, makes the rules.”  While the bank has the gold, they compete with other banks, who also have the gold.  Their rules are necessary, they do not need to be changed.  There are many companies that argue the execution of the rules are inefficient, but efficiency really does not substantially improve protections for banks or add construction success for customers.  A shared ledger allows banks - as the trusted source of project funding - to set the rules for project payment releases, monitor the project health and all but eliminate any chance of lien.  Cash-flow-lubricated projects attract competition to accelerate work at more competitive prices with superior protections for virtually every player in the chain.

Insurance: Competitive Advantage

Insurers’ obligation to pay is the most potentially powerful tool insurers have, but is very difficult to systematize and scale given the daunting challenges of insurers collaborating with a huge, highly fragmented and complex construction industry.   Since all construction has chronic payment risk and inadequate cash flow, it makes sense for property insurers to use their irrevocable obligation to pay to attract the construction industry.  Since cash flow is most attractive at the project level, inter-industrywide collaboration between insurers and the titans of construction is less important than mechanizing a platform that can be scaled from one project to many thousands of projects.

Government: Competitive Advantage

In some cases, opportunity for small subcontractors (with limited financial wherewithal) is only one part of the total equation.  Some very talented and well run companies still cannot automatically get the trade credit, working capital and cash flow they need to keep pace.  The struggle is unnecessary when the government funding source can allocate contractor-planned and approved payouts directly to these subs.  Similarly, the subs themselves can allocate material budgets to the ledger to enable them to procure all the materials they need without the material provider taking on risk.  Working capital constraints are greatly alleviated, cash flow accelerates and there is no need for trade credit.  Government agencies can see activity on the ledger for each bid project.  Bids improve.  

Why would construction lenders need to change their highly refined processes?

Success for construction lenders means providing their customer with the funds needed to build the project they want.  To protect the bank’s interests, protective draw schedules are put in place to assure the project is done – and done without liens.  Albeit necessary protection, slow draws cost project time and money.  Some oversight, work and material providers avoid working on bank-funded projects, charge more or require large owner-deposits. This is especially true for classes of product that are fabricated offsite and installed after fabrication is complete, when providers are still not paid until after the next draw.  Customers pay interest on capital needed for construction, with process requirements attached that add to the construction cost and delay project delivery.  In a world where settled business models (think taxis) can be unsettled in months (think Uber), this one probably has disrupters’ attention.

Why do property insurers need to change?

Success for property insurers is making their customer whole as quickly as possible and protecting their loss ratio from significantly inflated reconstruction payouts; especially overblown demand-surge prices following disasters.  Insurance reconstruction is the most inflated of any type of institutionally funded work and is getting worse.  Claim departments are startled by the rate of new disadvantages to mitigate, using tools that have not been substantially redesigned in decades.

Why would government funded projects need payment changes?

Many government entities endeavor to help smaller subcontractors and material providers have the opportunity to be awarded contracts.  In some states women and minority owned enterprises are guaranteed a portion of publically funded construction.  Most contractors we talk to are supportive of this mandate, but it comes with unique challenges.  Providing opportunity alone does little to help solve problems with deficient working capital, trade credit at material providers and enough rapid cash-flow to keep up with fast-paced project schedules.  In some cases contractors help these subs as much as possible, but obviously there are some challenges beyond their control.  These problems work their way to the top like air bubbles in concrete.