As significant as the construction sector is, it has struggled during the pandemic, which caused frustration and hardships for contractors. As a result, their projects were delayed, which led to suffering colossal losses. It was essential to find a solution that balanced the burden of the contractors. Billd was incepted to provide financial support to the contractors after witnessing these issues firsthand. It recognizes how a lack of access to working capital impacts a contractors’ ability to operate and grow their business.
We, at Insights Success, caught up with Jon Katz, the Vice President Marketing, to know more about Billd and how it is helping contractors by giving them access to funds with terms that mirror their repayment cycle.
The Strong Foundation
Subcontractors are among the last in line to get paid on a commercial project and are typically required to pay for materials far before they’re paid for their work. Billd steps in to pay the supplier upfront, then extend a pay-when-paid, or up to 120-day term to the contractor, allowing subcontractors to take control of their cash flow, and ultimately grow their businesses. Through its cutting-edge solutions, Billd is helping fix a construction payment cycle that has been terribly broken for decades.
Billd’s project-based material financing product is an innovation in construction finance – providing terms that align to construction payment cycles and align revenues to expenses. The company pays suppliers upfront for materials, then extends pay-when-paid or up to a 120-day term to subcontractors. Contractors pay a small, weekly interest-only payment until the final repayment is made to Billd, at which point payments end with no additional fees. The project-based component of the product allows the company to provide far larger credit limits to subcontractors than traditional banks or suppliers are willing to offer, opening up opportunities for construction businesses far greater than they had prior to Billd.
The Stones and The Mud
While most people don’t think of construction business owners as prototypical entrepreneurs, the construction industry indeed boasts extremely entrepreneurial, optimistic, and prideful business owners. With that being said, the construction industry has historically been underserved by the capital markets, and in many ways, been victims of predatory lending. This has caused an understandably negative connotation towards financing organizations, one in which Billd needs to battle against.
Additionally, these business owners are wary of debt as an instrument to grow their business and believe cash is always king. Breaking this misconception has proved to be a challenging proposition.
Rising Above the Rest
Billd’s project-based financing approach offers significantly larger credit limits to construction businesses that ultimately would not be able to demand it elsewhere. The largest competitors to Billd are lines of credit from banks and supplier terms. Banks underwrite lines of credit on past performance and are largely industry agnostic, so inevitably, they compare construction businesses to companies in more stable cash flow industries.
Billd’s expertise in construction allows it to underwrite and view construction businesses through a unique lens, ultimately benefiting growing subcontractors. On the other hand, suppliers are experts at selling material but not assessing and mitigating collections risk. Billd can combine the power of wall street with the construction industry to supercharge the purchasing power of growing businesses in construction, unlike its competitors.
The Consequence of the Pandemic
Talking about the impact of COVID-19 on the construction industry, Jon mentions that has reared its head in several ways. Project delays from job sites that have been exposed to the virus have created extended delays, which impact everyone involved in the project. Additionally, the mass exodus of cities to suburbs and the move to remote work has given pause to developers looking to build office buildings. The combination of short-term project delays and potentially long-term hesitation around the future state of business has left cause for concern for commercial construction. On the flip side, the infrastructure bill signed by Congress that could provide a spark to the industry, with a large part of the bill focused on construction.
Leveraging Technologies to Upscale Services
We asked Jon his opinion on the necessity for businesses to align their offerings with newer technological developments, to which he says, “As technology continues to evolve, so do the industries that they serve. When new technologies gain mainstream adoption, it’s critical for subsequent technologies to seamlessly integrate into these new customer workflows in order to find success. The customer’s goals more or less stay the same (growth, profitability, etc.), but the tools in which they seek to achieve those goals change. Therefore, it’s critical to position your company as a thought leader and influencer about the changing trends and new customer preferences by aligning your values and R&D investments in a way that moves with the industry.
A Robust Organizational Culture
A strong culture is critical to success as an organization, and it begins and ends with the people hired to join the organizational family. Billd’s culture is defined by certain core values that it lives by – Grit, Selfless, and Always Better. It celebrates when each team member exhibits these core values, which are internal and external, towards its customers.
Conjugating with Communities
Billd has recently kicked off a national events campaign with the goal of becoming a familiar face in the national construction community. To further this effort, Billd also increases involvement in local association chapters nationwide to connect with subcontractors across the U.S. The company is excited to ramp up its event and association sponsorships to grow its relationships with the contractors it is doing business with and the ones it hopes to work with in the future.
Carpet Rolling into the Future
Moreover, Billd will be a part of every commercial construction project within five years in the United States. Whether that’s financing the materials that lay the foundation of a new high rise or whether it’s a SaaS tool that enables stronger financial management of projects, Billd will be there as a partner and facilitator of success in a meaningful way.