Dive Brief:
- Construction finance firm Briq has unveiled Briq Cash, a new banking service that is exclusively available for contractors, Briq announced on Tuesday.
- Briq Cash is an offshoot of the company's main focus on developing software to help contractors with their financial work. The service will allow contractors to set up wallets on Apple Pay, open accounts and add as many physical or virtual debit cards as needed to navigate purchases, according to the release.
- Briq Cash will allow contractors to move funds from other accounts through automated clearing house (ACH) or debit transfers to their Briq Cash account, with the money accessible as soon as it arrives. The service is free to use, even for contractors who aren't currently Briq clients.
Dive Insight:
Briq Cash wants to solve what it calls "inefficiencies" surrounding payments in the construction industry, from time-consuming tasks like opening multiple accounts to digitizing files and data like receipts and invoices.
"There's different regulatory requirements that sometimes companies have to be compliant with," said Ron Goldshmidt, Briq co-founder in an interview with Construction Dive. "There's a lot of labor and an expense involved in the unposted costs of construction. That's something that we're aiming to tackle at the source."
Goldshmidt was clear that the app wouldn't be a replacement for the current banking relationship, nor does the company offer loans or other lines of credit at the moment.
The idea of payment lines for contractors in the industry isn't new, particularly as the finance industry is getting involved in contech. In February 2021, construction financier Built raised $88 million in funding, and automatic payments platform FlexBase raised $2.5 million in pre-seed funding this past May along with other contech firms. The Flexbase deal is in addition to the company's recent announcement of a credit card tailored toward contractors.
"I think the fact that you can go from a legacy banking setup to something a lot more virtual and a lot more modern, is going to be really helpful in terms of personalizing how you want to do your workflows, by project, by cost code, by merchant, by employee, whatever. However your internal process is, you can essentially mimic it in Briq Cash," Goldshmidt said.
Longstanding Issues
Financing is often a rocky road for contractors, where late payments are a common reality in the industry, particularly during the pandemic. A report from construction software firm Levelset, the 2021 Construction Cashflow & Payment Report, showed that only one contractor in 10 gets paid in full, and that payment delays have worsened since 2020, with just 9% of companies only being paid on time.
The situation is even worse for subcontractors and other professionals beyond general contractors. One in five subcontractors and other sub-tier firms, according to the report, regularly wait beyond 60 days to receive payment.
