- Flexbase, an automated payment platform for contractors, has launched a credit card tailored to construction companies.
- Targeting small- and mid-sized firms, the Flexbase Card is available nationwide, offering up to 60 days interest-free credit, according to a release shared with Construction Dive.
- The company aims to help these smaller firms overcome hurdles associated with slow payments and cashflow problems, said Zaid Rahman, CEO of Flexbase, in the release. "With our card offering, we are going to democratize access to capital for construction companies of all sizes, and bring equal opportunity to everyone," he said.
In May, Flexbase received $2.5 million in pre-seed fundraising in part from Suffolk Technologies, the venture capital arm of Boston-based contractor Suffolk. Launched in October 2020, the company aims to improve the speed of cash flow in the construction industry by enabling contractors to send invoices and paperwork to customers rapidly. On average, Flexbase claims, its customers get paid 63% earlier.
Contractors that use the new credit card in tandem with the Flexbase platform will be able to achieve insight into their financial data and other factors and will be potentially eligible to borrow larger credit amounts, the release said. New workflow enhancements between the card and the platform will also reduce paperwork and increase invoicing efficiency.
This is the industry's first card requiring no personal guarantee and no security deposit, the company said.
"Small and medium construction companies should not be failing in a booming market. By supercharging their access to capital, we are fulfilling the needs of a severely underbanked and credit invisible market segment," said Rahman.
In related news, software firm Briq recently launched a payment card for the construction industry. BriqCash gives general and specialty contractors the ability to automate invoice processing, onboard and manage vendors, control expenses at the cost-code level and make direct payments that earn cash back and industry-specific rewards on items such as tools, equipment rentals and supplies.
Access to financing has taken on a critical role for contractors of all sizes since the COVID-19 pandemic, which has slowed payments, according to a study by construction software firm Levelset.
Just 9% of companies always get paid on time, a decline of 60% from last year, and some of the financial risk correlates directly to the construction payment chain, the study found. General contractors are four times more likely than subcontractors to get paid within 30 days, and 50% more likely to get paid in full. One in five subcontractors, suppliers and other sub-tier parties regularly wait beyond 60 days to collect payment.
"The pandemic drove financial uncertainty through the roof and put an extra kink in the flow of cash on projects across the country, " said Scott Wolfe Jr., CEO of Levelset. "Payment delays throttle a company's ability to be competitive, take on new projects, and grow their business."