I need help! info@chipi.works (this goes right to the CEO, but he is also in charge of getting coffee. So hang tight!)

Frequently asked questions
What problem does Chipi solve?
  1. Cost of financing via trade credit is very high
  2. Suppliers are first to commit money to a construction project and last to collect money. 
  3. Builders typically run negative cash flow and have little access to lenders at reasonable terms
  4. Builder cash flow problems introduce project risks and costs 
  5. Underrepresented groups are largely underbanked or unbanked and so have an additional challenge in accessing enough finance to enter or succeed in project ecosystems.

 

How does Chipi work?

It is super easy! There are five steps but really just 1 or 2 for each user, as follows:

Quote: Either a builder or supplier can attach a materials list and quote to chipi. See the next section “What is the easiest way to start?”

Approval: A builder forwards a quote and materials list to someone to approve. The approvals can include as many people as needed until someone, usually a property owner (but maybe another builder), chooses to fund the approval request.

Funding: This is just the time it takes for money to change hands between the funders bank and Chipi’s bank. 

Delivery: Once delivery has occurred, the builders or funders can mark it as complete. The supplier can also optionally mark it as complete but to advance to payment, it will still need to be acted upon by the builders or funder / property owner. 

Payment: The builders and funders can now release funds to the supplier, deducting any amounts needed for shortages or damage.

What is Chipi?

Chipi enables inexpensive financing, sourced by project owners, to replace expensive financing provided by suppliers.

Chipi is a neutral third-party that facilitates approvals and payments between a property owner and the materials suppliers as chosen by General Contractors, Sub-Contractors, and/or Trades on a construction project. 

 

What is the financial limit of a Chipit?

At this time, $10,000 per funding event (i.e., money sent to Chipi). Companies receiving money have no limits. We can increase limits as needed.

How many Chipit's can I have open at any time?

As many as you need within a single project or across multiple projects. 

What is Funding?

Funding is the step when a property owner sends money to Chipi that is to be paid to a supplier upon delivery of goods. The Funding step, in which Chipi is holding funding in custody, gives the supplier the assurance that if they deliver goods, they will be paid promptly. 

Who chooses the materials and quantities?

Nothing new here. The trade/subcontractors will choose the materials and supplier. 

The property owner or funder is only responsible for funding the materials. Builders remain in control of the material choices and quantities.

Is Chipi an escrow company?

Heck no! No one with suits in this joint. We are a technology company. Our process resembles that of an escrow company but the property owner and builders are always in control. 

What are the benefits to Property Owners and Funders?

Using your money to support your project is the best way to

  1. Collaboration versus adversity. Most teams engage in zero-sum game to maximize their chances of being paid and paid quickly.
  2. Less payment risks. Avoid pre-lien or Preliminary Notice document workflows. (what is this?)
  3. Eliminate the legal risks of Mechanics Liens coming from suppliers.
  4. Keep your project on schedule and on budget. Work slow-downs and stoppages are often connected to money as workers shift attention to projects that have less payment risks. 
  5. Attract the best building talent! Make your project the one everyone wants to work at because the cash-flow burdens are reduced or eliminated. 
Whats wrong with supplier credit?

1) It is expensive for suppliers and hence for subcontractors.  The financing cost is embedded in the cost of materials. 

2) Administrative costs – Enforcing and tracking legal rights like preliminary notices and mechanics liens are expensive and no fun.

3) Timing Risk. Managing payables and receivables well presents unnecessary risks. 1 in 4 construction firms will go out of business within. 1year and 3 in 4 by its 10th year.

4) Comes with limits.  Are your revenue opportunities limited by credit availability? Are you buying from suppliers simply because you need credit rather than price or availability?

 

Where is the money being held while awaiting final payment to a supplier?

A bank! We use Dwolla to manage payments and the money that comes to Chipi is placed within their financial institutions.  

So what does it cost?

Nothing if you are a builder. Funders will see a small transaction fee related to banking charges.

If you’re a supplier, it is an early-pay discount – very common in the industry. The project owner or Prime GC will determine the early-pay discount rate and broadcast it to suppliers so you know the cost of participation. The cost will also be on display within the application.

Chipi will be less expensive than your current cost of providing trade credit or accepting credit cards. Payment is released upon delivery confirmation.

What's wrong with using my credit card?

Credit cards have limits and affect your business and personal credit ratings.  The cashback or other credit card gimmicks are paid by you through higher prices on materials.  

Chipi is free for builders and will make managing your business easier because you’ll never have to manage, or be limited by, cash flow again.

For materials suppliers, Chipi is less expensive than any other means of getting paid by customers.

Where is the status information of a Chipit?

At the top and bottom of a Chipit card. The top of the card will indicate either the next step to be taken or the status of a funding or payment. At the bottom of the card, there is a “Feed” that assigns a time stamp to all actions taken. There are also “Funding” and “Payment” specific feeds you can review.

Can I cancel a transaction?

Yes. A funding transaction can be canceled when en route to Chipi. Also, if Chipi is holding funds and you have not authorized a release to a supplier, just contact us and we will refund the money no questions asked.

If you or your agent (like a builder) has authorized release of money to a supplier, you’ll need to contact them. We are here to help!

How does money move from property owners and funders to suppliers?

We move money bank to bank using the ACH system. This is the same system that 93% of people use to get paid – so its safe.  

What if I want to use Chipi with a supplier who isn’t aware of the solution?Goes Here

No problem. 

If the supplier is offering an early pay discount on trade credit that is at least 1.25%, you don’t need the suppliers permission. Just attach their quote to a Chipit and get it approved and funded. When delivery is marked as complete, they’ll be happy to participate in the payment process 🙂

Isn’t holding money the only way to get builders to perform?

Money does seem like leverage but its a false god. Choking money from builders and suppliers is usually the source of many of the problems you experience with the process. Delays, work stoppages, rework, and inefficiency all usually trace back to a scramble to get paid. The margins in construction are too small to support the negative cash-flow builders are compelled to endure.

So what leverage do you have? Remember, you have NOT yet paid for the labor costs – which can be 50% or more of the budget. Clearly builders would like to earn a living. So the “stick” of unpaid labor costs is still in place. Anyway, word-of-mouth is ultimately the biggest leverage you have. 

Lifting the financial burden of materials purchases off of builders helps them stay focused on executing for GC’s and property owners.

 

What is Dwolla?

Dwolla is a powerful payments platform that securely connects to bank or credit union accounts to enable the transfer of money for any individual or organization in the U.S.

What happens to the extra money if the Suppliers early pay discount is more than Chipi’s fee?

Good question! Unless the builder or property owner/funder has given us instructions to hold back more than our standard fee, the supplier keeps the difference. If Chipi is instructed to hold back more than its fee, we will return the extra money to whomever is expecting it. Email us at info@chipi.works subject line “Where’s my money fool!” if you have special final payment instructions. BTW, we will give you in-app control in the near future. 

Why did the transaction fail?

Sometimes transactions to or from a bank or credit union can fail. Here are a few reasons why a transaction can fail:

  • Insufficient funds: There are insufficient funds in the sending bank or credit union account to complete the transaction.
  • Frozen account: A bank or credit union account has been frozen.
  • Other reasons: A bank or credit union rejects the transaction for some other reason.

If a transaction fails, please contact your bank or credit union to check on the status of your account. Then either re-initiate the transaction or ask your financial institution why the transaction may not be processed.

Why is my transaction still pending?

A bank or credit union transaction usually takes 3–4 business days to complete via the Automated Clearing House network (ACH) used by banks to transfer funds. Please note that transfers take longer to complete if over a weekend or a holiday.

How does Dwolla protect customers’ data?

At Dwolla, we take protecting data seriously. Dwolla maintains compliance with the SOC 2 framework. This framework provides an independent, third-party assurance that we are taking the appropriate steps to protect our systems and your data.Learn more about Dwolla’s security practices here https://www.dwolla.com/security/ 

Why am I being asked for more documentation?

If we ask for a photo ID:

  • Additional information is needed to verify your identity. Please upload one of the following

forms of identification:

○ An unexpired, current, state-issued driver’s license or identification card OR

○ An unexpired, current U.S. passport

If we ask for a bank statement:

  • Additional information is needed to verify that you are an authorized signer on your connected

bank or credit union account. Please upload a copy of a recent statement.