Startup Circle: How is SaaS startup Recko using automation for payments reconciliation?

Recko is a finance operations platform for fast-growing internet companies. It provides a comprehensive and robust technology stack to manage financial data and enable financial workflows such as Reconciliation, Commission calculation, Payout creation, and reporting, for businesses to track, manage and account money end to end. With the sudden blast of digital transactions, Enterprises, Banks and Financial institutions are finding it difficult to keep track of the money flowing across the organization. Recko enables businesses to monitor large volumes of transactional data without writing a single line of code. It ensures if the money flow between the beneficiaries is in correlation with what needs to be paid out.

Recko’s financial operations platform is used by technology companies across the globe. It has customers across multiple industries like e-commerce, food tech, fintech, neo-banks, gaming, etc. It works with some of India’s top companies like Grofers, Meesho, Dunzo, Pharmeasy, Curefit, Udaan, MPL, Khatabook. The company was set up in 2017 by two young entrepreneurs - Saurya Prakash Sinha and Prashant Borde.

Saurya is a second-time entrepreneur. He has designed and scaled teams that worked on MarketPlace, Order Management, Accounting, Supply Chain, Settlement, and Payments systems in Flipkart, Grofers, and PhonePe. During this time he worked very closely with the finance team. Saurya has also been the founder of Townrush which was acquired by Grofers. With CiOL, Saurya underlines the way Recko works and the fintech industry in general.

How has Covid-19 accelerated the transition to digital for the traditional financial industry? What will be the new normal in the industry?

The overall economic uncertainty after the onset of the COVID-19 pandemic, as well as having to adapt to remote working, has put business planning processes under immense pressure. Additionally, the goal for most organizations has been to “survive first, grow later”; subsequently, postponing any project or cost item with minimal importance. The pandemic brought about a massive set of challenges for the organizations to adapt to - teams had to be moved to remote working environments, business processes were disrupted and had to be redesigned from scratch, etc.

One common theme which we witnessed during the initial phases of the pandemic was how data was being made available to teams when they became remote. Finance teams who had thought about centralizing financial data management and introducing systems fared better than organizations who had manual processes and data was spread across local systems.

Finance leaders need to reduce the amount of time that goes into looking at historical data and planning for short-term growth and start focusing on long-term growth. They need to ensure that their teams are well-equipped and decisions are based on solid data and accurate forecasts. One of the major challenges that finance teams face is data: not the lack of it, but too much of it in too many different places. They have information coming in from different payment gateways, COD partners, card swipes, and the marketplace. With COVID 19, finance managers understand the need to have a stable financial operations system in place that allows them to store and track money end to end.

What, as per you, are the five important things that financial operations should be looking at today?

2 out of every 3 financial transactions are now made online. It is justified to say that an average customer would have used at least one or two fintech products. It is chaotic to manage and maintain multiple tools spread across departments. The end-user will have to constantly learn and unlearn new technology which will hurt their efficiency. Having this in mind, a fintech solution should address any concerns that might arise in terms of data storage, accuracy, and validation.

A good financial operations system should:

Support payments velocity: High-frequency transactions mean high-frequency payments. Companies need to be settled within two or three days to help them exponentially grow their inventory or services.

Cover omnichannel nuances: As businesses offer products across channels, whether web, mobile, offline, or hybrid, it creates newer financial nuances. It can range from different commercial contracts, data formats, settlement frequencies, etc. Your financial operations system needs to be nimble and robust for fluent transactions and a consistent omnichannel experience.

Monitor transactions for business integrity: New payment methods and customer demands are emerging constantly. Thus, treasurers and finance managers need to explore how best to meet changing demands. They also feed to ensure that it creates no fragmentation and additional processing costs for their business; thus, not eating significant profit margins and eventually outweighing top-line sales growth.

Be audit friendly: In the absence of organized transaction data, everyone from engineering, product to even founders get pulled into collating data for audits and diligence. Managing transactions across a large set of stakeholders means it is important for digital-first businesses to have not just adequate but foolproof architecture in place. This exposes non-compliant behavior and fraudulent transactions in time which means breezier audits.

A single version of the truth: Businesses have unstructured data that spans across different tools and services that they use. When there are too many manual touchpoints in sourcing, updating, and preparing data, there is a high chance of the data being modified erroneously before passing it on to the revenue assurance owner. Therefore, you need to have a centralized space where you can bring all this information together and allow users to access the data from a centralized source.

How can small financial players overcome the challenges faced while adopting technology into their business?

The primary challenge that any finance team faces when it comes to embracing technology is Change. Business models have become increasingly complex in the past decade, especially in the consumer-centric era. Everyone recognizes the need to modernize their processes but ends up being unsure about where to get started. To add to this, it is difficult to leave behind familiar tools like spreadsheets. Hence, a lot of digital transformation initiatives in finance end up back to square one.

Embracing digital transformation is not as complex as it sounds. They need to look at the benefits rather than the roadblocks. Having a robust financial operations system offers them:

• A central source of truth for all financial information and democratization of data.

• Business processes become scalable and are decoupled from individual dependencies.

• An airtight check to the last decimal point on each transaction.

• Be audit and due diligence ready anytime.

• Ability to capture, validate, organize, and report financial events accurately.

• Reduced time on manual reconciliation.

• Improve frequency of financial operations processes and verification to ensure gaps are identified in a timeline that enables course correction.

What changes is Recko bringing to the industry?

Recko provides a comprehensive and robust technology stack to manage financial data and enable financial workflows such as Reconciliation, Commission calculation, Payout creation, and reporting, for businesses to track, manage and account money end to end. It helps businesses manage large volumes of data, identify discrepancies, and manage commissions.

Here is an example of how Recko helped Meesho. Meesho is one of the largest social e-commerce marketplaces currently serving over 10 million entrepreneurs across South Asia. Using Recko, they were able to manage 30X growth in the volume of transactions with ease; reduce time to identify and plug discrepancy by 75%; build trust and credibility for the financial data ecosystem in the organization, thereby enabling the finance team to become a growth driver; and communicate faster with their delivery partners and payment gateways on SLA's.

Agility in communications helped Meesho accelerate and optimize the receivables process. It also helped it bring clarity into their financial operations and impact by plugging leaks and reducing errors. Further, it helped them expand seamlessly into the Indonesian market with no disruptions in the finance operations.