An Australian mother and entrepreneur wants to shake up the Australian construction industry after seeing her husband’s subcontracting company go bust due to a common but shady practice.
Louise Stewart and her husband were unable to prevent their Perth business from collapsing under the personal debts that had accrued following the financial crisis. A number of builders were unable to pay their bills and were declared bankrupt.
The construction industry became oversaturated with builders taking advantage of the then Rudd government’s $14 billion primary school construction program, which was intended to boost the economy.
Ms Stewart said she saw builders trying to pay off their debts by taking on new projects, rather than wasting money on other construction projects or even personal expenses.
The industry’s house of cards quickly collapsed under the pressure of mounting debt, leaving homeowners, subcontractors and suppliers empty-handed.
The mother of two saw in 2020 that the Morrison government would make the same mistake with the Homebuilder Scheme and urged them to ban the practice or face a new wave of bankruptcies.
Her pleas went unheeded and the re-swollen sector was faced with skyrocketing costs, leading to 2,975 bankruptcies in the 2023/2024 financial year.
Without government legislation, Ms Stewart took on the task of improving payment processes in the sector to reduce the risk of insolvencies.
Australian entrepreneur Louise Stewart (pictured) aims to improve the financial security of the construction industry with her third-party payment platform, ProjectPay
Mrs. Stewart had worked for international technology companies and made millions from the sale of her company, Revive Group, before her husband’s company went bankrupt.
Despite the success of her own business and the fact that her husband had owned the company for over twenty years, they came to the conclusion that the debts made the company irreparable.
“When you have that many builders going bust and not paying you, it is literally impossible to run a business in that environment,” she told Daily Mail Australia.
“The problem of builders going bust, subcontractors not being paid and the project owner being left with nothing but financial losses is a major problem that has existed in Australia for a long time.”
She said her husband “wasn’t the same” after his business went bankrupt and that he had to work hard over the next few years to pay off the loans he took out to keep the business afloat.
The problem has also affected a number of other small business owners, whose lives have been ruined by huge debts.
“(Subcontractors) fall into the debt trap and are given expensive credit cards or loans where the family home is put up as collateral to provide working capital to complete projects,” Stewart said.
“They hope to get paid later, but all too often they don’t get paid until 120 days or more later, or not at all.”
She added that she was seeing the same trends that mattered to her family emerging again and she was looking for a way to make payments more secure.
Mrs. Stewart’s husband’s subcontracting company went bankrupt because so many builders went bankrupt
The mother criticised the Australian government for failing to introduce laws that would not protect clients’ or subcontractors’ money from insolvency or misappropriation (stock image)
Ms Stewart launched ProjectPay in 2019, which allows subcontractors and builders to get paid incrementally for the work they do on a project.
The company that chooses the ‘buy now, pay later’ option checks that the costs relate to the work on the project and pays the invoices. This allows the customer to pay after the construction is completed.
This means that customers do not face a loss if the builder goes bankrupt, while subcontractors can receive payments more often.
“What we have built is a technological platform that eliminates any risk of loss of money through collapse or misuse of a building,” she said.
However, Ms Stewart left for London in 2020 after seeing that the British government had more interest in the company than the Australian one.
She was subsequently accepted into the UK’s Global Entrepreneurship Programme and was given funding to expand her operations in the country.
After winning awards for innovation and best small business payments in the country in 2022 and being named to the UK Women in Fintech Powerlist, Stewart is keen to bring the business back to Australia.
She said she was disappointed that the government had not introduced laws similar to those in the United States to protect subcontractors and customers.
Her platform aims to reduce the financial risk for customers and subcontractors and ensure that their money is only spent on the project they ordered (stock image)
Trust statutes in the country protect all payments to a company if the company goes bankrupt. Furthermore, it is illegal to spend that money on anything other than the agreed project.
Ms Stewart said the company had since received significant interest from banks, contractors and customers in Australia seeking security against insolvency.
“Even if your bank is delayed in releasing your loan payment, we will continue to pay your bills and those of your subcontractors so your project can continue,” she said.
‘And now we’re finding that we’re being approached by some very large banks in Australia saying, “We want to work with you because we want to provide an end-to-end payments process.”‘
A project manager in Sydney said he was “interested” in seeing how ProjectPay works in practice, but expressed concerns about the benefits for builders.
“Every builder has their own system and it would be difficult for a customer to come to me and say, ‘I want you to use this system,’” he told Daily Mail Australia.
‘Getting to know the new system, uploading invoices and much more, that sounds like a lot of work.’
He indicated that safety is becoming increasingly important in the sector, but also said that builders need to be enticed.