This audio is automatically generated. Please let us know if you have any comments.
The quest for faster payment affects many businesses, but those in construction can experience even longer delays.
Their billing and accounts receivable systems are critical, but many legacy financial platforms used in construction trades don’t offer modern payment and accounting options, according to Payra, a software company that automates accounts receivable operations.
Payra’s software integrates with most enterprise resource planning (ERP) platforms designed to help blue-collar industrial companies modernize their cash collection functions.
last month, pay announced in Investment of 15 million dollars from Edison Partners, an investment firm, to help accelerate its growth. Although this is the first and only fundraising event for the company to date, Payra has ambitions to transform payments in the construction industry.
The startup’s services aim to help building and construction material suppliers accept digital payments such as cards and ACH, and automate reconciliation within their legacy financial systems that often lack API (application programming interface) connections.
Through AI-enabled technology, a payment “is now built into my system of record, like the pacemaker of my business, and that, to a large extent, not to use too much hyperbole, wasn’t really possible before,” co-founder Thomas Cecil said last week in an interview.
“The magic for [companies] is that they’ve basically been told for the last 20 years, “Hey, you can take credit cards, but you’re going to have to figure out what that’s tied to,” Cecil said.
Several companies offer accounts receivable automation products, including BillTrust, Growfin, and Versapay. Payra says its solution integrates with nearly all legacy ERP platforms, even those nearly 30 years old, without requiring contractors to make large investments to replace their existing systems.
“The vast, vast, vast majority of these companies are on ERP systems that the general public probably hasn’t heard of, so the challenge is to work with what they have rather than presenting them with a replacement strategy,” Cecil said.
Founded two years ago in Nashville, Tenn., the company focuses on larger general contractors, including commercial concrete, lumber, HVAC and electrical trades.
The 14-employee company relies primarily on direct sales for growth, and Edison’s investment will help with the expansion, Cecil said. Edison’s investment was Payra’s first outside capital after being “bootstrapped” by the founders, co-founder and CEO Riley Lovingood said during the interview.
“The biggest piece is to alleviate a lot of the friction and making a general contractor have to jump through hoops to pay somebody,” Lovingood said. “We provide more access to make it easier for them to pay … right from the bill to the phone, to the computer, right there.”
These companies generally operate with legacy ERP systems rather than retail-oriented software such as Intuit’s QuickBooks, Lovingood and Cecil said in the interview.
Lovingood is a former staffer for US Senator Bill Hagerty, Republican of Tennessee. Cecil, a serial tech entrepreneur, is Payra’s Chief Product Officer.
Most companies in the space don’t have a means to capture payments or their accounts payable data and integrate it with their finance functions, even if they can send invoices with electronic payment links, Cecil said.
Many of these companies still navigate paper invoices, paper checks and spreadsheets to manage their accounts receivable, Lovingood said.
Payra makes money from a percentage of its transactions, the co-founders said. Payra’s credit card payments average $3,500, but “it wasn’t unusual for us to see credit card transactions north of $400,000,” Lovingood said.
Payra targets companies that are dominant in their region but are still fragmented because their industries are not very consolidated, Lovingood said, pointing to the 12,000-company U.S. ready-mix concrete industry as an example.
“Each of them dominates a circular radius between where the plants are because it’s a perishable product, you can’t ship concrete,” he said. “It’s very fragmented or balkanized. Everyone has their own territory.”
Payra considered using Stripe’s Braintree enterprise payment solution or PayPal Holdings within its business, but found they didn’t work for its needs, Cecil said. “You can’t do that in this business because the tickets are so big that the risk controls on these modern processors will either hold the payment or block the payment,” he said.
