Contractors are as varied as the projects they undertake – and the key difference between them is often cash flow. Many contractors have reliable access to cash or lines of credit, while others may have trouble finding a payment solution that provides them with the transparency and flexibility they need to run their business. These contractors understand both the reality of slow or delayed payments and the crucial need to find a solution that unlocks the ability to grow into a number of new and bigger jobs.
Here we break contractors out into four main groups, while taking a specific look at how each would interact with Billd’s one-of-a-kind payment solution.
Owner-Operator Accounts: Ideal for Billd
- Newer businesses
- Revenue $500K+
- 10+ employees
- Predominantly residential with some commercial
- Owner-operator with limited business experience; skilled in their trade
- Live from project-to-project
- Have little back-office resources
- Little-to-no reserve cash
- Typically pay COD, joint check, or credit card
Owner-operator accounts are typically run with a minimal staff who use their limited annual revenue to bid on smaller projects. They are skilled in their trade and produce quality work, but have yet to build relationships with suppliers, regular customers, or banks.
Typically, owner-operator accounts rely on joint checks or credit cards in the absence of receiving terms from their suppliers. As a result, many of these accounts are forced to turn to factoring or lenders who require liens on existing assets.
Billd is the type of payment solution that these small to medium sized businesses need. It eliminates the need to use proceeds from one project to pay off another and alleviates the stress of constantly moving money around. With Billd, owner-operator accounts can spend their time winning bids and building relationships rather than constantly worrying about finances.
Small Business Accounts: Ideal for Billd
- In business 3+ years
- Revenue $2-10M
- 20+ employees
- Revenue sometimes split between commercial and residential
- May have a part time CFO or bookkeeper
- Manage business expenses project-to-project
- Typically do not have access to bank lines and have to rely on credit cards
- May receive job accounts or COD/joint checks required from suppliers
- Consistently winning bids, but processing paperwork and payments may be challenging for their operations team
- Often slower to pay causing supplier A/R team to track down payments
- If they haven’t been paid for their work, they don’t have the cash to pay suppliers
Small businesses typically aren’t fully established, but are growing rapidly. Having operated for a handful of years, they have built up enough annual revenues to justify a small staff to support client relationships leading to a mix of residential and commercial work. That being said, this type of contractor usually doesn’t have a financial “safety net” underneath the business. As is the case, a slow or delayed repayment from a general contractor or property owner reverberates onto credit cards and these small businesses often find themselves delinquent on payments to their suppliers.
Billd is the perfect solution for their “project-to-project” circumstances. Billd acts as a finance partner opening up the opportunity for small businesses to grow by allowing more time to pay for materials which allows them to bid on more projects, and larger projects.
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Relationship Accounts: May or may not be a fit for Billd
- In business 10+ years
- Revenue normally greater than $10M
- 50+ employees
- Run a strong business and solid operations
- Adequate cash flow and pay within term
- Supplier sales team spends a lot of time cultivating these relationships
- Typically receive standard supplier terms
- Most of their revenue is from commercial projects
Relationship accounts are not as well-established as premier accounts, but have put significant effort into cultivating beneficial relationships with suppliers. They work on a variety of contracts, although they tend to favor commercial projects over residential projects.
Most relationship accounts are approximately half the size of larger premier accounts. They have operated for over ten years and maintain a staff of 50 to 100 individuals. Bringing in a revenue in excess of 10 million dollars per year allows the maintenance of a “safety cushion” of cash, meaning that slow payments are not a death sentence for them.
Billd’s payment solution is not particularly well-suited for these types of relationship accounts. However, sometimes it can make sense for these type of contractors to make an occasional large purchase with Billd.
Premier Accounts: Not typically a fit for Billd
- In business 20+ years
- Revenue greater than $20M
- 100+ employees
- Plenty of access to cash and bank credit lines
- Demand best supplier terms and no repayment issues
- Almost all of their revenue is from commercial projects
- They dictate their terms
Premier accounts represent contractors who are well-established within the business world, existing for upwards of 20 years. They typically maintain a staff of over 100 employees, and can expect to bring in revenue in the tens of millions each fiscal year.
Their established nature give premier accounts an advantage when interacting with suppliers. With ready access to cash and credit, premier accounts often set their own terms rather than needing to conform to those of the supplier. Suppliers are usually eager to work with premier accounts due to frequent extensive commercial projects, which requires large quantities of materials.
For these reasons, premier accounts are typically not in the market for Billd’s payment solution. Their available funds sufficiently weather difficulties, such as delayed payments. In addition, they have the freedom to serve as the dominant party in contractor-supplier relationships.
Billd Has What You Need
Billd is a win-win payment solution for both contractors and suppliers and is the only payment option specifically designed to purchase construction materials. Contractors can enjoy flexible payment terms while suppliers get paid upfront for materials, rather than waiting 30, 60, or 90 days. Billd gives everyone involved in the construction process a solution that provides the much-needed confidence of clear, straightforward repayments and financial stability.