The construction industry has a love/hate relationship with payment. We love to get paid – we need it to survive. But the disconnects at every corner of the job give the industry a bad reputation.
That reputation comes into play at every level. Owners are warned that contractors are all just a bunch of con artists looking to build a shoddy product (or nothing at all) and take off with the cash. GC’s are made to look like they’re holding all their subs in cuffs, withholding their payment like a ransom. Material providers risk everything to keep their customers, and then get burned when they lose out to a non-paying job, a slow-paying job, or somebody that’s just trying to stay alive.
The problem has compounded itself over years and produced some pretty poor and worsening statistics:
- 70% of the work is one by companies with less than 4 workers (source)
- Contractors have the lowest 5 year survival rate (source)
- The industry writes more than 1 billion checks every year
- And uses 1.2 million BIC Pens
- Construction has losses of $1.6 billion/yr because of inoperability (source)
- The same 2-4 unit job in 1971, takes 85% longer to complete now (source)
- Construction ranks last for accounts receivable & working capital (source)
The reality is that, while the rest of the world has been updating their tech and streamlining their processes, the construction industry is still using paper checks for payment and post-its for invoices. You might be thinking “Not me! I use such-and-such-project-management-tool!” or “No way! I pay all my guys on time!” – and you’d be right about those things. At BuildPay, we call those “first degree fixes”. What BuildPay’s technology is doing is allowing for second, third, fourth, fifth….degree fixes.
Payment should be the hub of every construction job and so that’s where we’ve positioned our technology. Funders and owners can see project progress online and can watch as materials are purchased for their build. Contractors can see that their payment is locked, and can never be held in someone else’s bank account, as long as they do the work. Material providers are assured payment directly from project funds – removing the need for extending trade credit. It’s about time that getting paid in construction was this easy. #GotPaid.