Mom and Pop shops and businesses in the USA make up 99.7% of all businesses. According to the US Census, 13% of all those Mom & Pops deliver construction services. Seventy percent of all construction work placed is by subcontractors and most of them have 4 employees or less. Approximately 95% of all US material providers are Mom & Pops with less than 3 locations. Though they appear small, Mom and Pops are a huge factor in our nation’s economy!
Despite their strength in numbers, these Mom and Pop material providers and small construction companies face daily challenges that larger companies do not.
- The construction industry has the longest accounts receivable in the world (75 days). It’s the Mom & Pops (M & P) that carry this burden.
- M & P material providers see themselves as “the bank” for projects; they extend trade credit to contractors and subcontractors to execute work.
- Construction M & Ps also can count themselves among the world’s businesses with the least access to working capital. Experts report that this trend will only get worse – given regulations and the high rate of failure among construction companies.
- Materialmen and contractors almost universally report that “everybody’s holding the money longer.”
For Mom & Pops, payment is a necessary evil. We hear them say it all the time, “I just want to get paid.” Getting paid is seemingly so simple, yet a huge part of their daily routine is chasing payment. The construction payment relay repeats itself millions of times every day with each actor holding the payment baton as long as possible. Checks continue to be “in the mail,” or some other excuse. It’s just the way things are.
And yet, payment hardly ever gets attention as an industry-wide problem, despite it being the one and only process that all construction projects have in common. Paper checks were invented in Medieval Italy. How is it even imaginable in this hyper-connected world, with so many forms of financial technology and things like crypto-currency to enable faster and easier payment, that Mom & Pops are still writing checks? And sending them via US snail mail…to be settled days later between slow-moving banks?
It makes no sense. Convoluted payment processes need to be replaced with more efficient and modern technology. And so BuildPay set out to do just that: improve construction payment – only payment – the way it is intended; without friction, without charges, without risk and with transparency. BuildPay uses its own patent-pending financial technology to direct project payments exactly where they need to go; allowing Mom and Pop shops to make ‘getting paid’ the first and easiest thing they do.