Tuesday, July 23, 2019

Net30 wants to fix the construction industry’s payments problem

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.

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