The invoicing and payments process in the commercial construction industry is broken. It takes a median of about 70 days to get paid, which means contractors are often stuck without enough working capital. Net30, a startup in Y Combinator’s current batch, wants to solve that problem.
The platform lets construction companies handle invoices and then make online payments to contractors’ bank accounts. This digitizes a process that is still mostly paper-based (some invoices are still faxed and most payments are made by paper checks sent through snail mail). Net30 also has a feature that calculates early payment discounts. In fact, Net30’s founders, former commercial construction project managers Casey Bell and Anthony Cirinelli, originally built it as an early payments platform.
As the two talked to contractors, however, they realized it would take more to fix construction’s payment problem. The issue is so severe that delayed payments are one of the main reasons construction companies fail.
“It’s such a big problem and it’s the lifeblood of the industry, but no one is addressing it in a very easy way,” says Bell.
Commercial construction projects can involve dozens of subcontractors, each of whom need to submit invoices. Each invoice, however, is actually a small stack of documents, including detailed breakdowns of work completed, signed legal forms and compliance documentation. One error, like a wrong date, can delay payment.
This is a nightmare for contractors who need cash flow in order to continue working on projects. Net30 gathers all companies working on a project together on its platform to make it easier to ensure that all invoices are accurate and also give subcontractors more transparency.
Net30 competes with construction invoicing software Textura, which was acquired by Oracle last year. Textura is designed for enterprise-level companies, however, and Bell says there are thousands of small-to-medium sized construction companies that don’t have invoicing software designed especially for their needs.
The company is among several startups focused on developing tools for builders, including blueprint app PlanGrid and building code compliance software UpCodes, which is also in Y Combinator’s current batch.
“The construction industry in general is a very undisrupted vertical that has been slow to adopt new technology, but construction companies are starting to see that it’s easier to implement software,” says Bell. “I think we’ll see the construction industry become more advanced and productive with these solutions.”
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Published at Thu, 27 Jul 2017 17:00:52 +0000