Construction materials

The BNPL plan facilitates the purchase of construction materials

The construction industry has one of the longest Outstanding Selling Days (DSOs) – an average of 83 – so it looks like a product that would allow these professionals to pay for the supplies they need without having to paying the full cost up front would be a good choice.

BlueTape Co-founder and CEO Yaser Massoudnia says he saw the need, and now his company is offering a solution. The construction finance and payment company announced on Tuesday, November 9, the launch of its Buy Now, Pay Later (BNPL) product that allows builders and contractors to buy and pay for materials. then over 30, 60 or 90 days.

“We’ll call it ‘build now, pay later’ in the construction industry,” he told PYMNTS in an interview.

BlueTape primarily focuses on small and medium enterprises (SMEs) in the market. They are more than 2 million in the United States and 82% of them have less than 10 employees.

“There are a significant number of small businesses that do the heavy lifting in the industry but have been overlooked by many financial institutions and have been seen as risky,” Masoudnia said. “We built BlueTape to be able to serve these guys. “

Create a unique subscription template

Small construction companies have generally had a limited number of financing options. Traditional lenders tend to look at a wide range of industries and use a single template for approvals. But construction companies and contractors might not get paid for a few weeks or even months.

“Many of these companies would not fit this conventional model,” Masoudnia said.

So BlueTape created an underwriting model with its partners that would help them get funding.

This model takes into account the characteristics of each company, its way of doing business, its history, its trades and its specific seasonality. By also working with vendors, BlueTape has access to transaction histories that help determine if builders can repay their loans. With this better understanding, BlueTape can dramatically increase the approval rating and give them better rates.

“But more importantly, we can make decisions in real time,” Masoudnia said. “So we are a point of sale solution. It was very important for us to be able to offer this flexible payment opportunity when they have an invoice and want to buy something.

Help buyers and suppliers

With the new BNPL product, when the builder or contractor wants to purchase equipment, BlueTape can provide their service from both sides. On the one hand, it allows resellers, suppliers, manufacturers and distributors to offer flexible payments to their customers. This helps them attract more customers and differentiate themselves in a commodity market, Masoudnia said. On the other side, BlueTape gives buyers, entrepreneurs and developers access to flexible payment.

This is especially important with today’s supply chain issues and significant price increases. Recently, some building materials have sold for up to four times more than a few years ago, Masoudnia said. This put a lot of pressure on suppliers and contractors.

The need to make a down payment up front has put builders and contractors in a similar cash flow crisis at a time when they need more cash than ever before.

“Coming us in the middle will help suppliers get paid quickly while providing flexible payment to their customers,” Masoudnia said. “This is where we can help both sides. “

Grow throughout the supply chain

BlueTape also offers a payment solution that launched earlier this year. Customers can use BlueTape to collect payments quickly, taking advantage of ACH or credit card processing. It is used by contractors, developers, suppliers, architects, engineers, distributors and manufacturers.

The company also aims to extend BNPL’s offer to the entire supply chain.

“We started with vendors using our product initially and offering flexible payment to contractors,” Masoudnia said. “Now we see the suppliers who use our product for their customers, they ask us to be able to use the product when they buy from distributors and manufacturers. “

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