Constrafor Raises $264 Million for Construction Finance Platform

Construction industry software firm Constrafor has raised $264 million in a Series A round.

The funding round, announced Wednesday (Nov. 27), will help the company expand its technology platform, designed to improve the relationships between subcontractors and general contractors (GCs).

“Constrafor is dedicated to tackling the construction industry’s most pressing challenges — tight margins, cash flow constraints, supply chain disruptions, and labor shortages,” the company said in a news release.

“The Constrafor technology platform modernizes how GCs manage subcontractor relationships, transforming inefficient processes into a streamlined digital command center.”

The platform offers procurement tools, simplified invoicing, and a connects GCs to a wide roster of subcontractors to ensure efficient and organized subcontractor procurement and payment, the release said.

The company also has an early pay program for contractors, designed to accelerate payments at “competitive rates, easing cash flow pressures and eliminating lengthy payment cycles,” Constrafor added.

As PYMNTS wrote earlier this year, late payments are a critical problem for the construction sector.

“In a sector where cash flow couldn’t be more important to firms’ survival, slow and delayed payments in the construction space cost businesses $273 billion in 2023 — representing nearly 14% of total construction costs, up from 12% in 2022,” that report said.

Some of the blame lies with the industry’s ongoing reliance on legacy payment processes that hinder the tracking and collection of business-to-business (B2B) payments. But to undo the downstream and upstream impact of late payments across the industry, something is going to have to change fast, PYMNTS wrote.

“Late payments negatively impact working capital and, by extension, cash flow,” Chris Lolli, vice president and general manager of B2B product, partnership and client management at American Express, told PYMNTS. “But beyond the negative impact on cash flow, it really damages relationships between buyers and suppliers.”

The conversation centered on findings from the latest B2B and Digital Payments Tracker® Series, which was produced by PYMNTS Intelligence in collaboration with American Express.

Manual processes and a lack of automation can cause unnecessary disputes and reconciliation challenges, thus undermining trust and erode collaboration in the construction space, where large suppliers, contractors, subcontractors and others interact and transact within projects.

But as Lolli explained, there are effective ways to automate payments for both sides, improving days payable outstanding (DPO) for the buyer and days sales outstanding (DSO) for the supplier, while helping B2B working relationships survive and thrive.