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Payment Solutions to Grow your Business



Project Type


Experts in this video

Allan Francis
Allan Francis
Rane Martin
Rane Martin

Managing cash flow is difficult for any company, but construction cash flow problems are some of the worst. It’s crucial for your company to understand what your payment options are and which is the best for your business to stop draining cash and grow your business in 2022.

You’ll learn about:

  • Why construction financing options are not one-size-fit-all
  • Which options are best for your business
  • How to keep your business growing in 2022


Speaker 1 (00:03):
My name is Kara. I work here at level set and we also have our speakers for the day and I will let them introduce themselves rain. You wanna go first?

Speaker 2 (00:15):
Sure. Yeah. Hey, I’m rain Martin. I am based here in new Orleans. Uh, I come, uh, background in banking and then, uh, you know, doing a specialized instruction financing, so happy to be here.

Speaker 3 (00:28):
Awesome. Thanks Randy. My name is Alan Francis and, um, I’m the operations credit manager for level set in material finance. I’ve got about 28 to 30 years of credit management experience and, uh, basically Ray and I are on the same team trying to help people get financing for their projects and, uh, just, uh, been in credit management with construction and electrical.

Speaker 2 (00:54):
Awesome. See that you see that Ary out. Did me with the introduction, so <laugh> gotta step up. <laugh>

Speaker 1 (01:02):
Uh, today’s webinar is gonna be a fun one. We have some really good personalities here with us today. Um, we all three mentioned that we work for level set and just to give you a little bit of background level set is a construction cash flow solution that helps contractors and suppliers protect their lean rights, automate, automate the paperwork process, streamline in construction financing and so much more. We are so happy to have you on this call today with us and a couple of things that I wanted to go over. So why do we need, um, options when it comes to payment solutions in the construction industry, uh, you know, we have the cash flow problems, which are the number one reason that construction companies fail, um, need cash reserves for your day to day and short term financial needs. And if you wanna grow your business, you really do need more liquid capital.

Speaker 1 (01:49):
And how do you obtain it? How do you get there? So today we’ll talk about the different payment options that are available to you and which one might be best to help you grow your business. Um, construction businesses do typically have large upfront costs that can burn through cash the beginning of a project. Well, before your payments come in, the scat makes it really difficult to manage your cashflow from the start of the job. So knowing your options can be a game changer for this business, but I do have one question for everyone. Are they one size fits all? That’s really what we’re gonna be talking about today within, um, the next 30 minutes. I do want to encourage everyone to use the chat box. If you have any questions, um, we are here utilize rain and Allen while they have, while they are here with us today. Um, ask them as many questions as you possibly can. They love answering questions. I know because the answer mine day in and day out. Um, all right. So I think we’re gonna dive right in, gonna start with factoring. Um, factoring is a term that I did not hear until I came to the construction industry. And so rain and Allen, do y’all wanna give us, um, kind of a 30,000 foot view of what factoring is and what it means for contractors and subcontractors?

Speaker 2 (03:00):
Yeah. So, uh, looking at factoring, you look at, uh, taking your existing, outstanding invoices that you have, uh, on jobs and you partner with a factoring company who provides you funds, uh, somewhere between 70 to 90%, usually right around 80%, uh, of the fun you get upfront, then, uh, you get the rest of it back after, or you receive the remaining amount minus, uh, some sort of fee, whatever the fee stretch is gonna be once your customer pays. So,

Speaker 3 (03:32):
And basically what you’re looking at when it comes to factoring is factoring becomes very intrusive. Uh, you’ve gotta be willing to, to not only open up that relationship that you have with your special customer, that that you’re dealing with, they’ve given you an invoice and now you’re turning that invoice over to someone else and they are now going to become the people that talk to your customer about payment. Uh, they’re also going to make sure they get theirs off the top, so are going to be they to qualify you. They’re going to want extensive amount of banking information, maybe up to one year of bank statements. They’re going to know that you paid your taxes. They’re gonna want to know have tax records and, and make sure that EV there’s nothing outstanding on your credit that could possibly cause them not to get their money. And so basically they be, <affirmative> not only do they become your partner, they kind of become your boss when it comes to this particular area. So that’s something that we run across when we have customers come to us is they’ve, they’ve heard of factoring and they’re very uncomfortable with that intrusive nature.

Speaker 2 (04:35):
Yeah. That you stole the words outta my mouth. That’s a very intrusive process. You, you, you don’t really get to hold any of your own cards. You give up everything to allow, allow them to kind of control the whole scenario. And a lot of times they take over, uh, they’re not just gonna take over one invoice or one job it’s gonna be, if they’re coming in, they’re gonna want all the invoices, not just the one job, one specific one, you’re gonna have to sign up for a contract with them that provides them more, more access to everyth across the board,

Speaker 3 (05:03):
Including bank accounts, even your, even your credit card accounts that you run everybody’s payments through. They’re gonna wanna be able to debit that weekly, sometimes monthly, but most of the times they wanna do a weekly or BI weekly debit.

Speaker 1 (05:16):
Wow. Intrusive does sound like the right word. And when we’re talking about out, you know, are they one size fits all? This seems very constricted and very tight. You don’t have a lot of wiggle room to do other things like we talked about earlier, having that liquid capital at your discre to use it, your discretion factoring, doesn’t really give you that it’s, it’s a bit of an advance, but there’s, there’s a whole lot more that goes into it. And it feels like it’s very constricted. Would you guys agree?

Speaker 2 (05:46):
Totally. A hundred percent. Yeah.

Speaker 1 (05:49):
So is there a use case for factoring? Is there a time where you would say like, yes, this is a really good idea or is it, um, an option that doesn’t, doesn’t hold a lot of weight here? What do you guys think based on your experience? So

Speaker 2 (06:03):
I I’ll, I’ll answer first. I think factoring is an option that, um, when you’re in need and when you’re feeling like you may be out of options, that, that, that one should come into play. That that’s kind of how I see factoring, uh, being an option. I, I, I tend to be a little bit more against, uh, going this route, but, uh, but that’s, it is an option whenever you’re, you’re kind of running out of other options for lack of a better term. So,

Speaker 3 (06:29):
And you’ll find that rain and I agree a lot that the factoring is probably to me, it’s the last resort, right? Above a title loan are going to a check cashing place because you do lose your identity. You lose your, the I, the business that you’ve tried so hard to keep and maintain on your own. This is gonna be the last resort. I would use it in a situation where if you knew that you had something, a, a large expenditure coming and you really had no other wear or no other place to grab capital, if you knew you had a payroll that you weren’t going to make, you might be able to, to leverage factoring to get that money in. But boy, you want to pay it back as quickly as possible. The, the, I mean, you, once they get you, the problem is getting into factoring is easy sometimes to get into once you’re approved, but it’s really hard to get out of. It becomes a Cru that you don’t wanna be a part of.

Speaker 1 (07:23):
Yes. I made a joke there. I’m gonna say it one more time. It’s very difficult to get out of like a very tight sweater.

Speaker 2 (07:30):
Oh, very,

Speaker 3 (07:31):
Exactly. Relevant Kara <laugh>.

Speaker 1 (07:34):
Yeah. Okay. So, um, I think that’s a great overview of factoring in terms of the options that, that we have, and, and we, as in the construction industry as a whole, um, you know, thank you guys for speaking to this, because I think that it’s important, not only to understand, um, what our options are, but again, which one is, is right for you and, and for your business. And if you’re trying to grow your business, is this something that you wanna look into? So that gave, um, I hope that gave everyone out there listening today a lot to think about when it comes to factoring, um, we consider factoring to be a little bit of a too tight situation when it comes to your flexibility and things that you’re able to do with your, uh, liquid capital. And so the next slide I will admit is a little bit tech, um, but it was necessary to get all this information out to you guys.

Speaker 1 (08:24):
Um, so now we wanna talk about traditional banking and, um, your credit options. We have lines of credit, we have credit cards, um, bank loans, business loans, all of these things. And this slide I’m, I’m really excited about because as Ray mentioned, your background is in banking and I, this type of credit’s a little different, but Alan, with your background being in credit, um, I think you guys are gonna have a lot to bring to the table. So if it’s okay, why don’t we start with credit cards? I feel like a lot of, um, contractors and subcontractors and businesses in general, often lean on credit cards, but there’s a lot going on when you open up a credit card for your business.

Speaker 2 (09:01):
Yeah. So, uh, I’ll start first. I’ll, I’ll just jump in. So credit cards, uh, you’re looking at, what’s typically in it’s in your first line, there’s high interest rates. There’s usually typically, especially for business credit cards, gonna be annual fees attached to that. Um, it, it’s great for daily spending. It’s great for emergencies. It’s great to, you know, kind of, I, and I know people whenever they think about credit cards, they think about building up points and building up travel rewards and all the different benefits that can come from that. But, uh, in terms of financing, your, uh, you know, specific jobs and just civil projects, I don’t know that I would go this direction specifically. I maybe getting a little ahead of myself, but, uh, but I, I don’t know that it’s the best choice for that direction because you know, really credit cards should be used for those daily sort of purchases that you’re taking care of on a daily basis. And then also, uh, for emergency situations, if you’re using it for a everything going into the business, then you’re kind of overing yourself and kind of shortchanging yourself from being able to have that flexibility if an emergency comes along. But

Speaker 1 (10:05):
Yeah, and one thing that I do wanna add before Alan jumps in, um, is all of the options we’re talking about today. Absolutely none of them are inherently negative. None of them, our, our poor options or a bad way to run businesses. Um, we just want to speak again at a high level to understand what they mean and how they can help you grow your business. Um, so I know that we have a lot of experience and opinions collectively as a group, as a construction industry. Um, but so I just wanted to make that disclaimer, that nothing we’re talking about today is inherently negative. It’s really just opening up and understanding how can we get better as an industry at making sure that our contractors and our subs are not only empowered to get what they earn and, and get paid for the jobs that they’re doing, but also are able to run their business smoothly and make sure that they’re able to meet payroll and do these other things. So, um, I’ll write Alan go for it. Credit card. What do you really think?

Speaker 3 (11:08):
What do I really think? Uh, I think banking, uh, my brother’s a president of a bank. So we have this conversation all the time, nowhere in the world. Can you join an organization or, or have, have a membership in an organization that plays by only their rules and you have no input. If you’re gonna be laid on the payment, you can’t say, please, don’t mark that down on my credit. It’s gonna be marked on your credit. Um, they have these commercials about, look, you can fly across the world and everything else. Well, what did our grandparents say? No such thing as a free lunch, your pay paying for it. You just don’t know how much you’re paying for it. Those free trips to Japan and Hawaii, you’re paying for it every day. You just don’t realize it. And rain made a great point. It’s great for those things that you’re paying off on a monthly basis the day to day bills and get your points that way. But you don’t pay that off when they want you to pay it off or they, well, actually, they don’t want you to pay it off. It’s gonna cost you. And the worst case scenario is you’re using personal credit cards to take care of your business and your children and your family. They don’t have a say, you’re, you’re using, what’s supposed to be taken care of your household to run your business. And that’s, that’s just a bad deal all the way around. So

Speaker 2 (12:17):
Yeah, you ne you never really want to find yourself in a situation where you’re having to use your personal credit for any reason, uh, to finance your business ventures. Uh, having those separated is gonna protect you as a business and, uh, protect your personal credit as well. And, uh, in turn, protect your future.

Speaker 3 (12:35):
The IRS likes that too.

Speaker 2 (12:37):
No, that’s very true. Yep.

Speaker 1 (12:39):
And, and so the way relating it here, back to our, um, analogies with the sweaters is that when you think about banking and you think about credit there, you’re almost drowning in options. There are so many banks out there, so many credit card art institution, so many ways you can get a line of credit, different loans. I mean, even just thinking about it feels overwhelming. Um, and so this idea that again, credit card can be a great option to build your credit and build your points and being, um, really diligent about paying those things off. But we know that when you start a job, your material supplier wants payment on day one, and you’re typically not paid till your job is completed. What is that? 60, 90, a hundred days. So some of these options while are really successful and, and can get you trips around the world.

Speaker 1 (13:32):
Um, they may not be right for your construction business. And that is something that, that is what we’re focused on here and today. So, um, we feel that these options are just a little bit too big. You can kind of drown on how many different areas you can look into and how many different directions this could take you. Um, we also haven’t really talked about interest rates yet. What does that look like when you have all of this interest with your, your loans and your credit cards, and, you know, you’re trying to pay these, you’re trying to make these payments, but it’s just growing and growing and growing. And, and again, like it’s too big, you’re just drowning. What, what happens to you when you’re your, your interest is more than what you’re bringing in and, and that hasn’t even touched, like the principle amount on that card.

Speaker 2 (14:16):
Yeah. I mean, especially when you’re looking at maybe what, 11.99 on a, on a good end on, on, from a credit card and then more than likely somewhere around like 23, 24, something like that. So, uh, talking percent in, in percentages. Yeah. For interest. Yep. Oh,

Speaker 1 (14:33):
That stresses me out, just hearing about it. Um, so, so, yeah, so that’s kind of the high level again on traditional banking and, and, um, your credit options. And the next thing we wanna talk about is material financing. Um, Alan and rain also mentioned at the beginning that this is something that they’re passionate about and working on. Um, so we really want to take a bit of a deeper dive into this. And, um, so I’ll kind of give you guys the higher level and then let, y’all talk through a little bit more. Um, but material financing is really allowing a third party to purchase those materials for you. Your supplier gets paid on day one, you strengthen your relation with those suppliers because they know that they will always be paid on day one. And then you have an, uh, a much longer timeframe to make those payments back. You don’t have the 11.99 credit card interests and, and other things like this, um, giving you the longer terms and, and better rates than loans and et cetera. So, um, guys, tell us, tell us more about financing. Do you have some good examples of, of people that have used financing and then grown their business or used financing to get out of a whole? Um, I would love to hear some real world ex um, examples.

Speaker 2 (15:46):
Yeah. So, uh, one, when you say grow your business and, uh, I, I know Alan and know both have, uh, some preed examples, uh, for this type of subject, but, uh, there’s one in particular that I’m thinking of in the Midwest that they, uh, came on board with us in August or, uh, and started doing the materials financing, and really just kind of, they, they weren’t sure what to do, and weren’t sure how to start to grow and how to start to take on those bigger projects. And, uh, you know, we, we worked with them for a couple weeks and kind of just breaking down options, looking at, uh, what, what options were out there for them. And if the financing was gonna be the best choice and, uh, ended up doing a project. And then, uh, one project turned into two, uh, that turned into three, something like that.

Speaker 2 (16:33):
And, uh, it it’s great to see because, uh, they were, they were actually able to start taking larger, uh, jobs on. And honestly they just purchased a, uh, bought out another company and their expanding, uh, their services. And, uh, he specifically says financing materials was the way that he found the cash and the capital to really grow and to be able to, you know, take on this new, new business venture and, and expand the way that he wanted to. So, uh, it’s been exciting to see he’s gonna double the amount of jobs that he’s gonna do this next year and really change, uh, his and his business partner’s lives. For sure.

Speaker 1 (17:11):
How do you guys feel like materials financing can change the industry on a whole

Speaker 3 (17:17):
Levels of playing field? I think mm-hmm <affirmative> between, um, your well established general contractors that have basically, they already had access to money. This gives access to new companies and small mom and pops and size companies that have never had the quote access that they had before. And it, it, it levels the playing field. It makes them suddenly competitive and, um, puts new new people out on the field, which is very exciting.

Speaker 2 (17:47):
Yeah. Yeah. We didn’t, we didn’t talk about this whenever. Uh, we were talking about banking and traditional financing, but a lot of times banks are going to look at, you know, they’re not even gonna take a look at you unless you’ve been in business for over two years. And even at that point, they’re still gonna wanna see multiple years of tax returns, multiple years of receivables. They wanna see that things are on track and know that, you know, uh, they can get guaranteed a payment back from what you have going on in your past and, uh, coming up in the future. Uh, and it’s a very, also intrusive process from that standpoint. Uh, they dive deep into the boats to see what’s going on, and that, that does limit you. It limits your ability to, uh, grow the way that you want to. And if you are a nearer company, just like Y will say, in this, this completely levels, the playing field, and it enables you to have that opportunity to move forward and have the chance to take on those jobs and to bid competitively with them because we’re looking at it project to project, and you have that chance to win those projects at that point and move forward

Speaker 3 (18:46):
Rain wouldn’t you agree that this is the least intrusive of all the credit options? Oh, I mean, we didn’t talk about this before, but really we were talking about how intrusive factoring is from what I can see. This is probably the least painful of all financing processes. Yeah. And,

Speaker 2 (19:03):
Uh, it’s it, it’s pretty amazing. And I, I think I’m still amazed by it. Uh, even after doing this for, uh, a while now, it’s, it’s amazing that we can look at the job specifically. We can know kind of what the whole job looks like, know kind of rough, roughly what the contractors are, uh, you know, stable stability wise. No, no kind of where they’re going, but then really dive in and just say, all right, what’s your invoice look like? You know, what’s the contract look like and that’s it. And that’s, uh, that’s a pretty amazing thing that it’s really not intrusive at all. It’s a very open process that, uh, we, we want to know the basics, but we just really wanna help you at the end of the

Speaker 1 (19:41):
Day. Yeah. Because you, you mentioned this, but just to be specific, and I’m gonna go to the next slide as well to kind of give a little, few more details here, but, um, we look, you guys look at the, the project level. We’re not talking like, Hey, let’s check all of your credit and let’s get super invasive. Um, this is like, Hey, what is your at the project level? What does it look like? What permanent materials do you need? Sounds good. In a nutshell, that’s kind of how it goes, huh?

Speaker 2 (20:12):
Yeah. Yeah. I mean, yeah, that, that’s the perfect way of saying it.

Speaker 1 (20:17):
And let’s talk about this, um, applying in seconds without affecting your credit, that I think is very drastically different from the first two options that we talked about, how are y’all able to do that without checking credit?

Speaker 3 (20:30):
When we do our underwriting, once you give it once you’ve submitted, you know, we have a program agreement once you’ve submitted. Everything that, that we ask for, which is very limited information, basically, all we’re asking for is the contract you have with your customer and the invoice. And then our underwriting team gets to work. And what we look at is we do look at credit, but we do a soft pull. It’s not going to be anything that’s gonna drag anybody’s credit down. We just want to get a snapshot of how you look in your space, in your space of your construction space. That’s all we want to know. The major weight of everything is gonna be on how safe that project is much. We can look at it and make sure there’s nothing weird about it. Like grant said before and what our lie rights are. And that carries the day. So it is like, we keep saying, it’s not invasive. It’s, it’s, it’s not intrusive at all. And we can make those decisions fairly quickly. Mm-hmm <affirmative> and much quicker than a bank could definitely much quicker for them factoring that might take a week, two weeks for them to get back to you. Oh, wow. Did that answer your question? I’m sorry. Yeah.

Speaker 2 (21:33):
<laugh> this is all about ultimate flexibility too. And it’s about strengthening the relationships that you have around you. So, uh, you can work with any supplier. You can, the same people that you, you use all the time or that you’re trying to build a relat ship with and prove that, you know, uh, y’all can work together for the long haul that we’re in for that we wanna help you with that. So we wanna, uh, work with any supplier you like Al I covered no affecting the credit. Uh, you can apply super quick. Uh, we’re doing 120 day payment terms as well. So it’s, uh, very flexible. You’re usually getting paid on day 80. I think that’s the industry average as of this moment right now. Uh, and, but yeah, I mean, it’s, uh, you know, it’s a very quick process, very flexible process, and we’re, we’re just here to help and strengthen the bonds that you have in place.

Speaker 3 (22:21):
Hey car, can I mention Reve mechanical, real quick. One of our customers, they don’t mind us mentioning their name. They came to us at the very beginning. They’d only had been in business about five months and they gave us their first project and they started doing multiple projects with us. And for 2021, they were nominated to be one of the best up and coming general contractors in Clark county, uh, by the Henderson chamber of commerce. And so they credit the ability to do material financing in the way to grow their business as quickly and exponentially as they did. So I wanted to give them, you know, give that a shout out. That’s a great example of, of how something can ramp you up quickly when you use something like material financing.

Speaker 1 (23:05):
Yeah, I totally agree. And that’s a great segue. Um, we did, we do have a, a customer story here. Um, Vivian bell, she’s an accountant at mesh, which is a millwork company, um, a very modern and sleek millwork company I might add. And, you know, one of the cool things about this product, I think is its ability to scale people, um, like us sub or a GC, and then all the way through to an accounting department, it might just be you, and it might be that you have an accounting department, but everyone has the ability to be a payment hero and be, um, be able to empower their business to grow. Um, and so, you know, I’m not gonna read everything that she says, um, but, but it boils down to, you know, financing is a great option. If you need more time between per purchasing materials and receiving your payments. Um, so I think that kind of sums up the bottom that we’ve been sitting up here at a 30,000 foot view. And I think all the way at the that’s really where this product shines is in that time period where you’re usually really strapped for cash, but this gives you, um, an extended period of time to settle up on all of your payments and such. Do you all have any other, um, examples that you wanna share before we dive into see if anybody has any questions,

Speaker 2 (24:26):
Let’s say open it up. Okay.

Speaker 1 (24:28):
So right now we’re gonna open up for questions. We just have a couple, um, a couple more minutes. So I’m gonna give one or two minutes, um, if anybody’s gonna type anything into the chat box. Um, but while they’re doing that, I just wanna say thank you to everyone for joining us on today’s webinar. It was recorded. So we will be emailing this out, um, as well as a few of a few other, um, materials and collateral things that you can kind of take a deeper dive into these options. Also do wanna mention, um, level set has a huge, vast library of documentation with everything from factoring to banking, to lines of credit, how to use those successfully, um, as well as financing and, and an entire construction finance hub, if you will. Um, so I’ll send a link to those as well. So you can take a deeper dive into some of those things, if you would like to do that.

Speaker 1 (25:20):
Um, I also will say yes, yay. Yes. In grade we will be sending a, um, rec record of this webinar. So feel free to share it, watch it again. Um, rain’s contact information will also be within that email. So if you have any questions directly for him, feel free to reach out to him. Um, again, my name is Kara and since we’re almost at time here, um, the last thing I wanted to say is, uh, level set does a lot with, um, helping contract and subcontractors and suppliers with their lean rights. And so we are, um, <laugh> okay, perfect. And so yes, we are indeed. Um, our, I’m sorry, the chat box distracted me. Uh, our financing is lean backed, which means that you are fully protected and we are fully protected. Um, and so that, wasn’t something we mentioned earlier, but I think it’s important to say so as we close out again, my name is Kara. Thank you, rain and Alan for coming and hosting the webinar with me. Um, I know I gained a lot of valuable information and I think our audience did as well. Do y’all have any parting words of wisdom?

Speaker 2 (26:25):
Uh, obviously my, uh, information’s gonna be attached to the email that knows out if you have any questions at all, or if you just wanna talk through options together, I am always happy to do that. Feel free to shoot me an email. We’ll get some time on my calendar and, uh, I’m happy to chat through anything and kind of help explore your options as well.

Speaker 1 (26:44):
Awesome. Thanks rain. All right, well, thank you again, everyone. Thank you, Alan. Thank you, rain. We’ll see you all next time. Bye.