Cash flow, ACH & embedded payments in field services with Adam Holden

Speaker A: Hi and welcome to another episode of the Payment Strategy Show. I'm Becky Coplin, head of payments at Rainforest. We help software platforms embed payment processing into their core products to grow revenue and improve customer retention. And I'm so excited to be here today with my friend Adam Holden, who is the head of payments at dtools. Dtools is a leading business management platform for custom integration and AV system integrators, providing proposal design, project management and field services capabilities. Adam, thank you so much for being here with me today.

Speaker B: It is a pleasure, Becky. Thank you so much.

Speaker A: I like this. My first question, uh, because I have this hypothesis that nobody gets into payments on purpose and once you're here you never leave. So I always lead off with a question about how you first got into payments. So tell us about how that happened and kind of what influenced you into stepping into that role.

Speaker B: Yeah, and I also have the same belief, uh, because I kind of fell backwards into payments. Um, so started in banking, uh, so I was a relationship banker, uh, for Capital One back in New York, um, and wound up leaving New York and finding myself at a small startup in Bo Raton, Florida, uh, at a payments company called LexCharge. And I had a little bit of experience with payments after being a relationship banker and moving into business banking. But, uh, I never actually touched it. Uh, so when I was able to actually start getting my hands around it and understanding it, that's where I kind of fell in love with it. And it was kind of on accident. Uh, and then that just catapulted me into the payments industry. Um, went through a couple of acquisitions, uh, wound up at profitsolve, uh, which was a portfolio company of gsp. Uh, and uh, now I'm over at AH D Tools as the head of payments. And honestly, I don't see myself leaving payments. Um, I really love it, Love helping businesses, understanding their cash flow cycles, helping them out with that, uh, and really shedding light on, on payments to them, which is not necessarily the most transparent, uh, field or products, you know, out there at the moment.

Speaker A: Yeah, I absolutely agree. The education is necessary and a fun part of the job, I would say.

Speaker B: Oh yeah, yeah. I mean, I've always loved teaching. You know, I love learning. I was fortunate enough to have some great mentors as I was, you know, coming up through the ranks. Uh, and I've been able to teach other people, build sales teams, support teams, um, all in the payment space. And some of my favorite things is actually educating merchants, uh, on payment platforms and how they work and all the fundrails behind it and all the different associations. Um, and some of my favorite rules and regulations.

Speaker A: The fact that you just said you have your favorite rules and regulations I think catapults you or cements you into like payment nerd. Done there. Do you have like a favorite interchange category while we're at it?

Speaker B: Uh, so I mean cost plus, you know, was always something, you know, I found larger merchants was always able to uh, benefit from all the different uh, interchange rates, you know, 300 plus of them that we get to look at our fund matrix from Wells Fargo, uh, every two times a year. Um, but uh, I think uh, if we're coming from profitability side one, uh, that's, I don't think is really used much anymore which is err, um, enhanced recovery, reduce, uh, which uh, you know we were able to um, you know, build a really profitable payments business back at LexCharge, you know, with that. Uh, but it's not really the most transparent, easy to understand for merchants. Um, so you know, larger merchants, you know, interchange plus, cost plus, uh, but definitely in verticalized software, flat rate, you know, that way merchants understand exactly what they're paying. They can forecast what they're going to be paying at the end of the month, end of the year, uh, and also help you know, with their costs and pricing of uh, their services and products.

Speaker A: Yeah, yeah. It's hard to be flat rate in terms of uh, simplicity but um, you've now, you've led payments now in a couple different roles at a couple different companies. Like what's unique about what you're doing today with field services and why is payments kind of so important, um, for businesses in your vertical?

Speaker B: Yeah, so I mean the one big difference uh, in you know, field services and AV integrators from where I came from, which was the legal vertical, um, was really like the ticket sizes, um, the progress based invoicing, which was something that was completely different and foreign to me, especially when I was you know, guiding attorneys on how to send out uh, you know, retainers, uh, and invoices for just services. Um, here, you know, dealing with AV integrators, um, having to, you know, basically have side by side of product and services and then also all of the different terms that they bill on. Um, that was like the biggest, biggest change. Um, and then also how many different pieces of the business payments touches when it comes to AV integrators. Because it's not just a product and a service. They have their subscription platforms, they have monitoring agreements on the uh, fire and uh, alarm monitoring size and uh, helping them set up their recurring billing, making sure that they're collecting on either on a monthly basis, quarterly or annual. Um, you know, it was big difference. But uh, again, you know, I always love to learn and you know, the cash flow cycles of these businesses is a lot more complex, uh, which I have a lot of fun with at the end of the day.

Speaker A: Yeah. And I mean you serve, you know, thousands of custom integrators and AV installers today. So like, what's, what's your take on as you're thinking about payment needs and cash flow in these, these aspects, like what's your take on ACH specifically, uh, for impact to these, to these businesses?

Speaker B: Yeah, it's a simple, simple answer is, it's very warden and it's unlike anything I had seen in the past, um, to where you know, maybe you had like a 50, 50 split or maybe it was just, you know, you know, 90% credit cards and 10% ACH, something like that. Um, you know, what I used to deal with in the past. But here we are mainly ach heavy, almost 70% ach, uh, which made it a lot of fun because the ACH platforms have uh, just changed over the years and the speeds have been getting better and the ability to have some more transparency in it as well, uh, which really led us into diving into the ACH product and expanding it, uh, you know, going from, you know, when we launched back in 2024 of August, um, you know, just having that standard ACH platform and then slowly migrating into having another option of ACH through Plaid, which you know, gave more transparency to, uh, our merchants, you know, having the bank account, um, the bank account confirmed, as well as the balance in the bank account to you know, help uh, reduce those pesky returns that we always see, you know, on day two of a four day cycle. Um, you know, that, that really, that really helped a lot. And then also, you know, with the advancements in next day ach, which we launched, uh, it was the 9th of this month in July, uh, that has been adopted and that's just been something that everyone has been asking for. Um, you know, the cash flow for these businesses, you know, you have to, you have to make sure we're getting them paid fast, you know, after settlement and that way they're able to, you know, get those deposits quicker, uh, get those products ordered quicker and you know, get into those jobs and on the sites and um, you know, really, really help their businesses grow, you know, at that point.

Speaker A: And where do you think this preference for ACH came from, uh, is it driven by the customers? Is it the pay the buyers? Who's, who's kind of demanding this payment method?

Speaker B: Yeah, I'm going to say both. Um, so it's going to be on the integrator side and the customer side. Um, I've always been a big believer of having as many payment options as possible and not really dictating how customers pay you because you want to just get paid at the end of the day. But even looking at it like that, people are still choosing ACH and especially for larger payments. Um, you know, the average transaction sizes for ACH are a lot bigger in, in this vertical than I've, I've seen in others. Um, and the integrators are choosing it, you know, because, you know, at the end of the day it's a lot cheaper than, you know, a credit card. And then also the customers are choosing it because, you know, they, they also have the money and they want to be able to just pay that out of their bank account, which is super simple. Um, so it's, it's definitely being led by both. Um, and it's, it's actually pretty fun to see. Like I said, like, as the payment landscape expands, uh, having more options for the customers to pay is always going to be a good thing. But also having the ability to have a product that funds just as fast as a credit card, uh, is fantastic for everybody. At the end of the day,

Speaker A: do you think that payment flexibility, like having card and ACH and plaid along there is like a competitive advantage for your installer merchants? Like, is that an important part of their strategy?

Speaker B: Yeah, yeah. And like I was saying, like, you know, being able to get paid in multiples of different ways is just going to increase your chance of getting paid quicker. Um, but also, you know, like, from what we've seen, especially when we're doing some of our, you know, uh, customer highlights, we've definitely seen having both of them side by side is increasing that speed to payment. Uh, and then also on the back end, you know, like I said, I always love learning cash flow cycles and things like that of the business. We've also had customers come to us and tell us that they've seen a massive reduction in their ar, which is adding cash flow, you know, to the business. So that could be, you know, cash flow that goes out to expand the business, maybe win more jobs. Um, but we, one of our, one of our really great customers, they saw a 70% reduction in their AR. So that was from 1.6 million down to 500,000 after they implemented D Tools payments in D Tools Cloud. Which was great, great to see, you know, because at the end of the day like, you know, we want to be able to help our merchants and you know, having someone come to us with that story, um, you know, just makes you feel like you're doing the right thing by them at the end of the day.

Speaker A: Yeah, that's a win. Like what, what a success story there. Like is it just payment optionality that you think drove that or just also, you know, implementation of some, some workflow improvements? Like what were all of the, the things that led up to that reduction, do you think?

Speaker B: Yeah, so it's, it's going to be, it's going to be the choices of, you know, different, different payments, uh, and the abilities to pay, but also, you know, how far we embedded payments into our software. Um, it touches almost every single piece of the software. Um, you know, from, you know, sending out a proposal and getting it signed and then being able to collect that deposit immediately, where in the past, you know, they would send it out, it would get signed, they would have to figure out a way to then send a payment request or something like that, maybe from QuickBooks or another provider. Um, and there's always downtime on that. And then also nowadays with, you know, fraud as rampant as it is, you know, you have this beautiful proposal that's being sent out that has everything on it and you're signing it and then you're getting a payment link in another email from another service. Um, you know, some people may be, you know, less, you know, likely to click on something like that. Um, so, you know, being able to have everything tied in, you know, like I said, through the proposal process, through the progress billing, uh, and then also for the recurring billing as well for their service contracts and subscriptions, I think it all ties together. Uh, and at the end of the day, you know, makes for a great product that's really helping the business and

Speaker A: you've got some interesting payment kind of frequencies that other folks may not have in other industries. You've got recurring, which I think is standard, but you've got this kind of job based or metric or uh, metric based billing that's unique. How do you guys handle and solve for that? Like tell, tell us more about what your integrators need there.

Speaker B: Yeah, so, so when it comes, when it comes to that, it's just going to be the ability to send out that invoice at that time whenever, you know, whenever it's going to be needed, um, because it is term billing. Uh, so it's either being sent out before or sent out after. Um, and we made it really easy for them just to go into the software, be able to manage all of those terms in one place underneath the project and just with a click of a button, be able to send that out, uh, whenever they need to. Um, and with the fact that there are those ups and downs and in between projects or in between terms, you know, being able just to have something at your fingertips to be able to send that out immediately, um, and get paid, you know, as quickly as possible, you know, again, you know, it's really, really helping the business. You know, at the end of the day.

Speaker A: I love that. So you've made a lot of like, key strategic decisions with D tools in terms of the needs that your integrator merchants have. Um, if you were to help us kind of translate some of that to other payment leaders in vertical SaaS, where what are some of the biggest challenges you see when working with your merchants on their payment strategy? And then m. Maybe follow that up with a, you know, what separates kind of you for platforms from winning, um, you know, against those. Those struggles.

Speaker B: Yeah, so, so one one of the biggest things which wasn't really too surprising to me because I kind of dealt with it, you know, and, you know, in my past, but it's really the change management around a new process. Right. So, you know, when you're either coming into a piece of software brand new or even, you know, adopting a new process in a piece of software, you'd use it and it's, it's scary. You know, people don't like change. They have something that works, so why would you want to change it? Um, but that's the biggest one. Um, and legacy systems, legacy payment systems and getting them away from that. And at the end of the day, really focusing on the one platform to help them run their business and be more efficient and have everything in one place definitely, uh, helps them get over that hurdle. Um, but that's because, you know, and I'll go into that second question, you know, with, with the winning platforms, you know, with payments, um, it's. It's really embedding it and making it a core piece of the software, which is going to help with that transition. Um, you know, so making sure that it's everywhere that it needs to be. There isn't anything like extra, like an, uh, external gateway or an external reporting system or anything like that. Just, just making sure that it's really simple. To use. But again, it's touching all of the right places of the software. Um, and when you're able to have that in your software, you're able to, you know, basically create that stickiness, uh, with the customer to increase that ltd. Um, and then also a lot of software companies, you know, they have great customer service and people know them and they're comfortable talking to them. And when you're fully embedded and you have, you know, everyone embrace it as a core functionality of the software, you know, the support team is the same team that's going to be handling those, you know, those questions, guiding the customer. So they're already speaking to someone that they know they're not being passed off to a third party, uh, that doesn't really know who they are, doesn't really know the software. Um, so that's a really big piece of it, you know, really making it a core functionality and not a feature. Um, and then also, I mean, just from all of the different payment partners I'd had in the past, uh, in all the companies, uh, choosing the right payment partner to match, you know, with your, you know, with your software and what you really need, you know, that speaks volumes, um, when it comes to being able to support it, um, and again, just having it a piece, a core piece of that, of that software.

Speaker A: I think a lot of payment leaders or even just companies that are thinking about embedded payment strategy, like, they really struggle to understand this difference that I think you pointed out, which is critical, this payments being core to the software versus kind of a value add. I think some people struggle to kind of make that leap. Um, how do you go about kind of diagnosing whether payments for you is a value add or core? And how do, how do you help ensure or what advice would you have for folks that are looking to ensure that payments feels necessary throughout m. Um,

Speaker B: I mean, at the end of the day, I mean, if you're at that point where you really want to offer that experience to your customers, I think it's a great thing. So you're not using a third party on the outside. Um, but really where it comes down to it is receiving buy in from the top down. Um, and here at D Tools we're fortunate enough to have a leadership team, uh, that really embraces the fact that payments is a core feature. Um, like I said, we've embedded it completely. All transaction reports, deposit reports, chargeback reports, uh, everything is embedded in the software to make it a core functionality. Um, and when you have a leadership team that believes in it and Believes in it like that. Um, it just comes from the top down. And you know, it goes down from senior leadership, you know, down to directors, down to the team with the SDRs, BDRs, the sales team, uh, customer success team, the support team, um, you know, and that, and for us, like that really, that really shined. Um, you know, especially when we, we released in August of 2024, you know, after some beta testing and, you know, running a couple of beta accounts through there and, and getting that feedback from our customers. Uh, and then, you know, August 2024 was a month before we went to, you know, one of the largest shows of the, um, out in Denver. And uh, that year, after releasing our payments product, we actually won two awards there for our payments, you know, one which was the best of show winner, um, by Residential Assistance magazine. Uh, and also we won the 2024 CE Pro best, uh, award in our software category. So I think that that just speaks to the fact that everyone really was on board. They wanted to work cross functionally because, you know, if you don't have that, you know, especially between product and sales and, you know, everything, you know, you're not going to get there. And honestly, it was, it was just a really cool experience to see all of that work together and to be part of a team, you know, that really cared that much to make sure that it was a great product, you know, once we, once we released it.

Speaker A: Congratulations. Those are meaningful awards. That's got to feel really good.

Speaker B: Yeah, that was cool. Uh, I was able to accept the award, uh, on D Tool's behalf. Um, it was neat. Uh, and also to know one of the biggest shows of the year with a lot of our customers there. Um, it was just awesome.

Speaker A: I love that you mentioned support being kind of one person to talk to and support when you have an embedded payment product. Uh, I think some FOL that are looking to embed are worried about the strain on their support team. I think in our experience, we've seen kind of actually tickets go down because you can kind of answer them all within context. Um, but if folks are kind of thinking about or hearing that concern from their support team, um, what would you say about kind of taking a support team that was at one point just software support and pulling in payments? What are your thoughts about how that goes or how to do that?

Speaker B: Well, yeah, I mean, it's all a testament to, I mean, one, picking the right partner like y', all, ah, you were able to, you know, give us our low code components that we were able to, you Know, get up and running really quickly. But when you, when you've truly embedded and it's not an integration, it, don't get me wrong, like payments to take on is scary. Um, like we said in the beginning, it's not always transparent. Um, but when you have everything aligned and you have it embedded and you don't have an external gateway to teach people, an external reporting to teach people, um, and it's just a piece of the software, it's a lot easier to grasp. And once you really get that across to the team and I worked really closely with the support team because uh, I believe, I mean just coming from sales and leading payment sales teams, um, in vertical SaaS for payments, um, you can sell anything, but it's about supporting your customers after the fact. Right. So I, um, really wanted to spend a lot of time with our support team and we did a lot of, you know, like a lot of team, um, like even one to ones and just you know, team trainings, um, and giving them access to everything that they would need to be successful. Um, but once, once they saw that it was so much a piece of the software and there wasn't much changing in the questions that they were getting, you know, yeah, you might get some authorization questions or like this failed or you know, an ACH was returned, um, with the ability to have uh, all of the transparency that you all provide to us, it was really easy for them to understand. Um, and that was really, it was a hurdle, but it wasn't that big of a hurdle. They really embraced it and the support team here has been fantastic. Um, and they really picked it up quickly. And just having them pick that up quickly and be confident in it shows when they do speak to a customer, uh, that they're able to answer the same questions, provide them that support, make them feel comfortable and then, you know, being able to close out that ticket, you know, with a happy customer, you know, leaving, um, you know, that's always, that's always great to see. But you know, at the end of the day like it is scary but if you have all the right things in place, it, it just feels like a piece of the software at the end of the day.

Speaker A: Yeah, I love that explanation and we've seen that firsthand so many times, right where it feels daunting, at the end of the day it's such a better experience and you've actually see kind of some of those support questions or asks even decrease because there's less of that back and forth and confusion between different systems that you all have solved um, with your award winning payments, uh, integration which is lovely. Uh, you've mentioned a couple different times this concept around culture and cross functional alignment. Um, we've seen that to be one of the most important elements to success. You all have built a great org, um, that is fully payment aligned for folks that don't have that. How do you go about creating that or getting that cross functional alignment if it doesn't already exist, like, like it does so well today at D Tools

Speaker B: I think, you know, just, just having even one or two people in the right place, uh, that can communicate it to everybody else will, will speak volumes. Um, you know I've, I've always gone from, I mean working, working you know, for you know, a payment processor and being on the payment side, um, and then going into software companies to where I may be the only one that actually knows payments. Um, as long as, as long as you have that drive and that willingness to be able to teach people and want to teach people about it, I feel they're receptive to it. But I feel like that's the big thing. It's just getting over that hurdle of, of, of teaching everybody that's not so scary. Um, and it'll, it'll trickle through, you know, all of the teams, you know, at the end of the day. Um, but I think that's what really takes is just having a couple people if you don't have any, um, you know, if you don't have a head of payments or maybe even you know, maybe if you're not that big. Having you know, a director of sales that has payment experience, um, they're usually able to, you know, teach everybody, you know, that, that payments, you know, being a core function of the software, um, is, is truly not that daunting at, at the end of the day.

Speaker A: Yeah, I love that, that cultural alignment or cross functional alignment based on education. Right. Or understanding.

Speaker B: Yeah.

Speaker A: So you talked earlier about your new exciting accelerated ACH products and XST ach, uh, which sounds like it's already doing really well just a few weeks in now. But where's, where's the roadmap go from here? Like where does payments evolve for your AV installers?

Speaker B: Yeah. Um, so one of the next big things with payments um, on the roadmap is going to be the tap to phone or tap to pay for in field payments, um, which is something that we've heard um, a lot of asks for especially since we launched our application, um, you know, for uh, Apple and um, Android as well. Uh, so that's being worked on. And to me that's a really exciting piece because coming from payments and you know, I'm sure you remember this Becky, like you know, having to plug in terminals into a phone line and calling the help desk and having to do downloads over the phone and then putting the codes in, all of that fun stuff. Um, the tap to phone functionality is really cool because not only do you not need a physical terminal anymore, you don't need either a square device or uh, even a Bluetooth reader anymore. It just uses the functionality of the nfc uh, on the phones. Uh, it really removes the ability to have to support terminals, um, which is a whole nother aspect of payments that I hope no one else really has to do. Um, because it is a lot, it is very confusing, time consuming. Um, and just with the new technology being able to enable a tech in the field to go out and perform a service and collect a payment right there on the spot when they're done instead of having to have a reader or even having to call back to the office and letting them know that they completed it and then having to send an emailed invoice out. Um, you know being able to get paid quicker is always you know, the name of the game. So that's really, that's really going to be fun and I'm really excited you know for when that, when that's released. Um, and then you know just going down the line, you know, deeper and better accounting integrations, um, because again making sure that we have an all in one software, uh, that they're able to run their business on, uh, and see everything in one place and have those deeper integrations with the accounting systems, uh, and then different billing options, uh, so different ways of invoicing, um, like line by line invoicing, things like that. That's going to be a major turn as well. Um, and then when it comes to like just payments in general, I mean we do have you know, accelerated ACH now. Um, so I mean as payments continue to get quicker and the payment landscape changes, you know on the horizon at some point I see you know, possibly same day payments come in which is uh, which would be something even bigger. Uh, so I'm just excited as everything is progressing, um, as is expanding, there's going to be a uh, lot of cool new options to be able to supply our customers with.

Speaker A: Yeah, I love that. And I have been in payments long enough to remember the dial up download terminal support. So ah, little PTSD wrapped up in there but I am uh, equally as excited about Tap to phone and that you've removed kind of nearly all of the friction around card present. Um, and what a fantastic use case for your folks where you've taken that even they pay invoices faster too. They're paying, ah, on site as the job's complete. Like, what a. That's such a natural fit.

Speaker B: Yeah, yeah, it's going to be, it's going to be neat when we release it. So I'm really looking forward to it.

Speaker A: Yeah, I'm excited to hear how it goes. Um, as a final question, um, it's hard to take kind of all of your experience and summer it up into kind of one thing. But if we did ask you to do so, what would be kind of one piece of advice that you'd give to other vertical SaaS operators who are building out their payment strategy?

Speaker B: Yeah, um, I mean the best part about being a verticalized SaaS company is that, ah, you know, you're serving that vertical, you're not generalized. So you know, all of the data that you're collecting and seeing how your customers are, are using your platform. Um, you know, it was always just something that we said even in marketing for payments. But I think it, I think it really applies to, you know, payment strategy and, you know, having your customers benefit from it. So, you know, it's like use the data you have on your customers to meet them where they're at. And what I mean by that is like, you know, having all that data. But by having all that data, you're going to be able to provide the best payment options and experience possible in that specific vertical. Um, and when your customers see that, they're going to feel that you have their best interest in mind, um, and that you want to make them successful. Um, and I feel like that's really the upper hand in having that vertical, uh, specialty.

Speaker A: Great advice and again, thank you, Adam, so much to uh, for your time being here with us today. We really appreciate it. It was great chatting with you.

Speaker B: Yeah, I loved it. Thank you so much, Becky. And it's always, uh, great chatting.