Contractors are increasingly forgoing manual billing and payment processes and adopting financial tech (fintech) apps specifically designed for the complexities of the construction industry.
“We were doing everything with spreadsheets, Word documents and files on servers,” Jeff Scalisi, vice president of operations at Livermore, Calif.-based Architectural Glass and Aluminum, told Construction Dive. “I didn’t even realize how clunky it was.”
Several fintech apps are now available that manage billing and payments for contractors while tracking material allocation and delivery and managing payment risk and compliance for insurance, diversity and other requirements, according to the article. Such apps also enable contractors to make financial projections so projects remain on budget and are profitable. Some also include credit products for better cash flow.
“The reality is that most fintech companies have ignored really difficult industries like construction,” said Zaid Rahman, founder and CEO of Flexbase Technologies Inc. in San Francisco, whose family members include builders and architects.
“We’re reimagining how money moves in and out of a construction company,” Rahman said. “We think there’s an opportunity to create an experience that’s designed for builders by builders.”
The construction billing and payment app space is growing rapidly, buoyed by increased investments by venture capital firms, according to ConstructionPros.com.
“While many of the existing players have developed powerful project management or accounting solutions, the billing and payment process is really the bridge between the two,” said Ben Conry, co-founder of Flashtract.
In January, the Atlanta-based fintech company received a $15 million Series A funding round, led by Addition and Shine Capital, to further develop capabilities for general contractors and subcontractors.
The construction industry is further “embracing the digital age” by starting to adopt fintech billing and payment apps that provide “efficient and workable solutions” to common problems, Neal Hooks, an executive at UK-based Payapps, told the country’s Planning and Construction News Today.
“Adopting alternative software solutions can lead to a much more efficient and collaborative industry that not only pays promptly but also has a lower risk and reduced likelihood of project delays,” Hooks said.
San Francisco-based Siteline in February received $18.4 million in funding—$15 million of which was raised in a Series A funding round led by Menlo Ventures, and $3.4 million raised in a seed round led by Brick & Mortar Ventures and First Round Capital, according to TechCrunch.
The billing and payments app enables contractors to get paid faster, as well as improve collaboration across project and finance teams, said SiteLine’s co-founder and CEO Gloria Lin, whose father owns a construction company.
“Getting paid in construction is a huge hassle, and that makes cash flow harder to manage,” Lin said. “Ultimately, we want to empower builders to make better business decisions, by transforming a painful payments process into a powerhouse of financial data … And, my personal mission is to make life easier for millions of hard working people like my dad.”