BuildPay provides a secure online platform to ensure that construction contractors and suppliers are paid quickly and directly. The blockchain-structured system electronically links everyone in the construction chain — from the project funder and general contractor to the subcontractors and material providers.
Fixing the Construction Industry’s Payment Pitfalls
Company founder and CEO Steve Wightman, who was in the commercial construction business for more than 30 years, established BuildPay in 2015 to address industry pitfalls.
“I know firsthand how difficult cash flow can be, when every player in the chain struggles to get paid,” Wightman says. “The construction industry has the worst accounts receivable rates, the least access to working capital, and the most stagnant productivity of virtually any industry.”
Wightman accepted the status quo until he completed a building project for an insurance executive in the Capital Region. That was in 1992, when Hurricane Andrew struck Florida and Louisiana. The executive asked Wightman to oversee construction efforts of 35 insured school buildings damaged by the storm in Louisiana.
Wightman leveraged the reconstruction cash flow of an insurance company to help expedite the recovery process. Contractors and subcontractors were paid weekly. In return, they had to show the work they completed and provide superior pricing.
“As a result, we put all of those schools back in business before most construction in the area even started,” says Wightman, who went on to oversee more than a dozen similar projects. Inspired by these experiences, Wightman founded BuildPay.
How BuildPay Works
A primary funder, such as an insurance company or a bank, is invited by BuildPay onto the payment platform to initiate the process. The funder then invites the project owner, who invites the general contractor (GC) to join. The GC, in turn, invites the subcontractors.
The contractors link their bank accounts with their BuildPay profiles for direct-deposit payment as they perform the work. Money that the funder has set up in an escrow account is split into two buckets: one for labor, overhead and profit, and the other for materials. The funder, which pays a small fee for the company’s online service, can see exactly what work has been completed before releasing additional money from the escrow account.
To ensure that the suppliers are paid for their materials at the point of sale and that the contractors themselves don’t have to rely on their own credit, BuildPay provides company debit cards that are linked to the escrow account.
Drawing from Rensselaer Student Talent
BuildPay, which has about a dozen employees, has made a point of seeking student talent at Rensselaer Polytechnic Institute.
Joe Galtman, who graduated with his bachelor’s degree in computer and systems engineering in 2019, worked for BuildPay in a co-op during his junior year at Rensselaer. Galtman, 22, rebuilt the company’s specialized card reader software app that links the machine to individual project accounts. The readers are distributed to participating suppliers.
“I was given a lot of autonomy in project development. I worked on something specific, refactored it, optimized it, and that was a tremendously valuable experience,” says Galtman, who eventually worked as a part-time employee for BuildPay during his senior year and now has a job as a software engineer at Bloomberg in New York City.
“Joe was a valuable part of our team, and as our company continues to grow, we look forward to recruiting other students for co-ops, internships and as potential employees, specifically in partnership with the new Rensselaer Arch program,” BuildPay Director of Operations Mark Frederick says.
Companies and organizations can participate in a number of student enrichment opportunities through The Arch at Rensselaer, a new program that allow students like Joe Galtman to apply their talents to solve real-world problems.
“Applied and experiential education is a cornerstone of the Rensselaer experience,” says Rensselaer Technology Park Director Karl Lampson. “And, through our pipeline partnership with the university campus, more companies in the Technology Park community are participating in this unique program to mentor students and help them turn their education and technical know-how into exciting careers.”
For more information on The Arch program, visit https://info.rpi.edu/arch/employers.