Building and construction software company ProjectPay has recently launched a new platform to remove builder risk on construction projects.
Project financiers and property developers will benefit from the innovative platform as it aims to protect investor returns on projects and streamline payments.
The software as a service (SAAS) platform is the first-ever end-to-end secure payment solution built for property developers. It will help improve the cash flow of contractors and tradespeople in the building and construction industry.
More speedy transactions and less risk
Condensing the amount of time spent on one task means more time can be spent on other areas that matter. All levels of the supply chain are paid at the same time. This removes contractors’ insolvency risk and the likelihood of a payment being delayed or missed is also minimised with this platform.
CEO Louise Stewart says: “Property developers often engage with builders that under-price the project to win it. This often results in builder collapse and builders can also run into financial trouble on another project which collapses.”
“This situation can destroy the property developer’s investor returns, and insolvency practitioners often move in to take possession of the site, laying claim to project funds. ProjectPay prevents this from happening by eliminating that very high risk of contractor collapse.”
Trustworthy and limits misappropriation of funds
Misappropriation of funds is a serious offence that causes businesses to lose money. Building insolvency is another challenge the industry is faced with too, but the platform helps tackle both problems.
CEO Louise Stewart adds: “In the UK and internationally, governments have recognised the value of using project accounts because they work, adds Ms Stewart. If project funds are misappropriated or lost that’s considered an unacceptable use of taxpayers' funds when delivering public sector projects. We need to apply the same standard to property developers in the private sector, who need to ensure they are protecting their investors’ returns. It’s vital to ensure that contractors on the project are getting paid, because they are intrinsically linked to the ability to successfully deliver projects.”
A £100,000 Innovate UK grant and completed trials of its payment system on projects in London worth £20 million and £7 million have been received by the system. The payment option is integrated with British retail and commercial bank Lloyds and multinational banking and financial services company headquartered in Melbourne, Australia ANZ Bank for project account provisions.
The Innovate UK fund was granted to ProjectPay as part of the British government’s sustainable economic recovery plan to guarantee swift payments from property developers to small businesses and contractors. The government has also advocated the transformation of digital payments and the use of project accounts in its Construction Playbook plan.
The fact the payment option is integrated with two reliable, market-dominant banks in both the UK and Australia increases trust. Backing from the established banks shows that the SAAS platform has a proven model that works well with other parties.
Ease of use with technology
The SAAS platform uses smart tech and a proprietary cascading trust system to protect project funds for work completed by subcontractors and suppliers, linking cascading project accounts with the payment request, approval and payment process.
The platform uses a tech approach that eliminates admin costs and enables project financiers to track project capital. This means that it is easy to ensure funds are used appropriately so that projects can be completed easily and in good time.
It is a solution to ring-fencing and streamlining payments. By digitizing the payment process the security of payments are better protected. Payment platforms such as ProjectPay’s could be what the building and construction industry needs to improve and move forward.