Flexbase is turning construction financing on its head with a new credit card — the industry’s first, according to the founders — that offers up to 60 days interest-free financing.
The company, which develops automated payments tools for contractors and the construction industry, was started by Zaid Rahman and Hadi Solh to target small- and mid-sized businesses.
Rahman, a Theil Fellow, and Solh grew up in construction families, hearing stories around the dinner table of cash flow pain points. When Rahman’s father, who ran a construction company in Dubai, had a customer not pay a multimillion-dollar invoice, he suffered a heart attack. Rahman and Solh joined to form Flexbase so companies would have easier access to capital so that cash flow problems could be avoided.
“Most construction companies are either broke or one degree away,” Rahman told TechCrunch. “One of those reasons is that most clients don’t like to pay on time. Another is that banks don’t like construction companies because of that cash flow problem, so the company is less likely to get short-term capital. That is also why they go bankrupt so often.”
Any construction company can apply for Flexbase Card, which is launching in Houston first, but the co-founders said those who use the card with the other Flexbase tools will be able to gain deeper insight into the company’s financial data and be eligible to borrow larger credit amounts.
Solh referred to the 60 days of financing as “a game-changer” for an industry where it typically takes more than 100 days to get paid. One of the drivers for that is that while the typical invoice can be one or two pages, construction invoices can easily be 50 to 100 pages, which includes state and county compliance documents. If even one piece is missing, the entire invoice can be rejected, Rahman said.
By automating expense management, Flexbase can reduce the time it takes for invoices to flow between accounts receivables and accounts payable and decrease the time to payment by 50 days.
“You can’t evaluate construction companies like other businesses when it comes to capital, but by doing the underwriting, we provide companies with enough credit to grow their businesses,” Rahman added. “We are providing you enough credit in two minutes to grow the kinds of projects and the client base.”
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November 11, 2021 at 09:00PM
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Flexbase unveils construction industry’s first credit card - TechCrunch
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