The Interview: Kunal Aggarwal talks about building Credflow

Automating the account receivables (AR) and payable processes have been climbing the priority list for most businesses. Founders and financial executives now increasingly see how end-to-end digitalization can have a positive effect on their cash cycle.

According to markets, the AR automation market size is expected to grow from $1.7 Bn in 2019 to $3 Bn by 2024, growing at a CAGR of 12.1% during the forecast period. In India, Credflow has come up with a solution so that businesses can streamline their cash flow and reduce their accounting cycle time without involving a huge workforce.

Delhi-based fintech SaaS tool, Credflow was built in 2019 to solve the hassle of collecting payments on time from your debtors.

We talk to Kunal Aggarwal, founder of Credflow talks the maturing Indian fintech startups ecosystem, how Credflow is helping thousands of SMEs and their growth strategy.

Origin of Credflow

Kunal was born in a business family and has witnessed firsthand how businesses are affected by late payments. Credflow was sown in his mind when he gained experience at home and then at his own company, a procurement startup, Rawble that he co-founded with his college seniors. Rawble was in the business of supplying raw materials to SMEs to address supply chain and procurement challenges. With some time in the business, they too ran into a vicious circle of cash flow. Speaking to customers, Kunal's discovery that cash flow was a greater issue than procurement was a watershed moment. That's when he decided to enter the market with Credflow.

What is Credflow?

Credflow is an AR automation SaaS tool.  It's aimed to build the full suite of cash flow management on top of this in terms of building solutions around cash flow based financing, solutions around their payouts and collect infrastructure and even treasury.

Kunal further explained in layman's term, Credflow is an automation tool that helps businesses collect payments from their customer faster.

Ideal persona for Credflow

Kunal informs, their current user base consists of very traditional businesses largely from the manufacturing and wholesale distribution industry. In terms of turnover, their user base includes companies with 1 Cr to 300-400 Cr revenue number. He adds,

"We have even seen a 50 lakh and a 1000 Cr company using our platform happily. For us, any business that's run by a single accountant or a founder or with a very high volume of invoices makes for an ideal customer."

Selling to non-tech-savvy Indian businesses

From day one, Kunal and his team consciously designed Credflow keeping traditional businesses in mind. Here are some of the things that helped them sell better:

1. Keeping the design simple and easy-to-use to avoid putting any strain on the customers' minds

2. The cash-flow problem is pre-existing and obviously isn't a good-to-have for businesses. Almost every business today recognizes this and feels the need for it to be solved. And they address it and help them not just solve this but boost efficiency, sales, revenue, to a very good extent.

"We were clear that this is the problem but often, identifying the problem is not enough. What we also figured out is that is there a market to be served? I mean, is it a good-to-have sort of a problem or is it a must-have? I mean is it a vitamin or, say, a painkiller for them?", says Kunal

3. Introduction of GST E-way bill accelerated digitization. The second fundamental shift has happened because of COVID. Pandemic has sped up digital transformation and adoption of technological products.

Kunal says,  "I think we understand this segment and their concerns very well. We reassure security, give them a written privacy policy, sign an NDA for customers and actually we have implemented, say, best of the best security."

How does Credflow work?

Credflow is a plug and play tool that works on top of the accounting software. The obvious prerequisite for any user is an accounting software like Tally. So businesses need to download the desktop applications and integrate them with their accounting solution. Currently, Credflow integrates only with Tally, but Kunal informed the integration plan with Busy, Quickbooks and Zoho is soon to happen. Kunal informed that it usually takes less than 2 mins to set up Credflow with an accounting setup.

How does your growth strategy work?

Credflow experiments with multiple marketing strategies (run ads, create video/ text content, etc.)  and channels. Credflow for growth relies hugely on the marketing team, salesforce and on partner channel program that includes CAs, financial consultants, and distributors of software.

There's some virality in the product that works for them as well. When a reminder is sent to businesses, for example, they notice, get inquisitive, and even sign up when they see Credflow in the signature.

Is India ready for a fintech revolution?

Kunal says, " I think this is a revolution that was just waiting to happen. If you look at the journey of Fintech, it all started in 2012-2013 wherein lending companies got backed with technology. Then came products around their payments, setting up UPI, and the regulatory compliance. And few of them actually became fairly successful. Products these days are solving core problems for these businesses A fundamental shift is happening in the way businesses happen in India and that is going to be something that continues to happen. In terms of payment systems, India, in my opinion, will be even ahead of the United States and other developed countries in ten years. In the total ecosystem of financial services, we will be ahead of any other country in 10 years."

Impact of Credflow on businesses? (before and after)

Credflow has been able to reduce the collection days by 20-25% on average, informs Kunal.

One of their customers had a collection period of close to 5 months i.e. 150 days before using Credflow. The company was in the business of Timber trading has annual revenue of 40 Cr out of which 15 Cr was their working capital. The challenge was to solve for the following: the founders had no financial experience, lack of visibility, manual on-time follow-ups with the huge user base, ageing of customers, and invoices and payments were not correctly reconciled. Additionally, they relied on sales and operations teams to follow up with the client. As a result, they had no way of knowing who owed money and who didn't. So they were basically doing everything by asking the accountant or making mental notes.

With the use of Credflow for about eight months, they were able to reduce their cycle from 150 days to 117 days. Follow-up with all of their 300-400 customer base was intelligently automated.

They got the much-required visibility and data analysis with the Credflow CRM. Second, what they observed was the reminder to customers were also automated. And the end impact was that apart from the fact that they were able to reduce their collection cycle, the much more important thing for them was that freeing up the working capital, they were able to increase their sales.

Kunal says, "The customer was able to roughly turn around the same amount of money 3 times which they were only able to do say 2-2.5 times. They can now grow their sales 40-50% without having to put any extra penny in the bank and then also that increases your profit and it becomes a very virtuous kind of cycle. So from a vicious cycle to a very virtual cycle, that is how I would describe it."

Who do you think is Credflow's biggest competition?

Credflow's main competition is Tally's customizable tools and the receivable managers.

Kunal adds, " Our key focus is solving a fundamental problem for the customers, and it really doesn't matter at the end of the day who your competition is."

We at Saastitute would want to Congratulate you and your team on your latest fund raiser. What's next at Credflow?

Kunal says, "Thanks a lot! The plan from here on is one, to grow the number of users. Today we have over 5k users on our platform, we want to reach 70k-80k users in the next 24 months. We want to stay very very focused on our SaaS product. There are a lot of things still to be built out. We are really focusing on building things that improve the processes even more. We want to enable customers to send different set reminders to their customers creating a credit score for them, enabling them to do payouts and collections through our platform itself, integrating user software like Busy, Zoho, etc. Also, we plan to expand our workforce and hire champions to join us."

If you're looking to find an opportunity in SaaS that helps you grow and make an impact. Credflow is the place for you, they are hiring for multiple roles. Just leave your resume here and their team will get back to you shortly!

Kunal adds, "We are excited by our product roadmap that is due to come in the next 6 months. So I think that is going to remain the core focus till at least the next 12 months by the time we get round 2 of Series A. After that period is when we also look to get into flow-based lending, treasury management and the other ancillary financial services linked to the cash flow of these businesses."

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