Digitization in financial data and enable financial Workflow – Recko

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. 

Prashant, a second-time entrepreneur, co-founded Recko to solve finance teams’ problems using deep tech. Before Recko, he co-founded Cubeit (acquired by Myntra) – a tech startup focused on distributed computing and machine learning. Prashant holds a Bachelors in Technology, Electrical Engineering, and Computer Science from IIT, Gandhinagar. He also holds an Entrepreneurial certification from Stanford University and has been part of several research projects, one of which is in Computer Science from Caltech, specializing in Community Seismic Networks.  Prashant is an avid cricket fan and follows it religiously.

Journey behind Recko ?

 In the last few years, the global economy has been witnessing a digital revolution. Every business out there was starting to accept digital payments. From a roadside vendor to a multi-billion internet company, everyone was getting comfortable receiving payments directly to their bank account. And, needless to say, customers also preferred this mode of payment. It is convenient and happens at the click of a button. This digitization paved the way to get things done faster and easier. Every other day, there are also newer innovative payment methods being added like buy now pay later, UPI based lending, etc  

While the process is simple and smooth for the customers, we noticed that the merchants faced certain issues when it comes to reconciling these payments due to outdated tools and practices. The amount of data that has been generated in the last two years is more than the data generated in the previous 100 years collectively. This data resides in data warehouses, data lakes, and is siloed. Especially from a finance point of view, the amount of data that the finance team has to analyze to understand the money that is flowing through their systems has skyrocketed. 

Traditional tools like MS Excel cannot scale to the demands of today’s finance function. To compete fiercely, businesses are looking into the data to ensure business integrity, financial controls and identify growth avenues and increase margins. Data-driven software companies are providing cleaner, usable data to make financial operations within a business better and forward-looking. 

That got us thinking, what if there is a tool that enabled internet businesses to reconcile easily and thereby helped them make informed financial decisions. As the business needs and consumer behaviors evolve, their finance teams need to transform as well. Prashant and I identified this problem in the companies we worked at.

 We saw a huge uncharted business opportunity here. Having closely worked with the finance teams, ourselves, we understood how a product such as Recko would empower its users in terms of financial decisions. We aimed to automate and fastrack this process. 

Today, Recko enables businesses to monitor large volumes of transactional data without writing a single line of code. It ensures that the money flow between the beneficiaries is in correlation with what needs to be paid out.

 Recko’s global financial operations platform is currently used by technology companies in three regions – Europe, India, and Southeast Asia with customers across multiple industries like e-commerce, food tech, fintech, neo-banks, gaming, etc. We work with some of the biggest global Internet brands like Deliveroo, Grofers, Meesho, Dunzo, Pharmeasy, Curefit, Udaan, MPL, Khatabook among others.

What products Recko Offers

At present, Recko offers two products – Reconciliation and Commission calculation. We will also be releasing Payouts soon. This gives an edge for businesses to maintain their entire financial infrastructure on Recko.

 Reconciliation

Our Reconciliation product is used by finance teams to monitor and track the money coming from all the channels like payment gateways, aggregators, offline stores, and going out to marketplace sellers, and delivery partners. The whole process of reconciliation is generally done once in 35-40 days due to the effort involved,  but with Recko as a financial system, our customers can do this on a daily basis. 

This has enabled the finance teams to identify the gaps and plug them right away rather than waiting for it to accumulate over a period of time. Our customers have recovered large sums from partners and prevented doubled payouts. They are able to reconcile their Nodal/Escrow accounts easily. Some of our customers who integrated Recko early into their finance systems drastically reduced the due diligence time during fundraising and got access to funds faster.

 Commission Calculation

Recko maintains all the commercial terms and the agreed payment cycles in its system. This eliminates human errors or guesswork.

 Our Commission calculation module allows users to keep a check on the charges applied by their payment partners, marketplaces, acquirers, logistic partners, etc. It is built to handle usage, target, transaction, and tiered fee structures. Our customers have recovered incorrectly charged commissions from their business partners, payment gateways and closely watch transaction aging to ensure they don’t go short of working capital.

Role of emerging technologies in Recko’s growth?

We right now leverage concepts in Big Data, Analytics, and AI. We went through a unique challenge of dealing with scale early in our journey. In response, we put a lot of effort into understanding and building modern concepts in Big Data and Analytics. We have built a data platform that supports precision at scale, high consistency, and iterative data transformation and analytics. Our platform supports critical functionalities like retrospective changes with audit trail, time travel at scale, and so on.

 Using Recko, customers are able to automate reconciliation and commission calculation. A typical month-end closure process that takes multiple weeks can be done in just a few hours. With our integrations, our customers are able to monitor money flow on a daily basis. With historical reporting and advanced analytics across multiple years, finance teams have much higher visibility. Finance teams using Recko are able to take care of strategic business decisions as Recko takes care of reconciliation, end to end.

Explain more about how Recko is helping different sectors

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 internet companies. We have customers from different domains such as e-commerce, healthcare, financial services, neo banks, food tech, gaming, hyperlocal, and so on.

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.
• Communicate faster with their delivery partners and payment gateways on SLA’s. Agility in communications helped Meesho accelerate and optimize the receivables process.
• Bring clarity into their financial operations and impact by plugging leaks and reducing errors.

Impact due to covid-19?

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” and 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 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.

Early days struggle.

Finance teams often spend a lot of time normalizing the data. This is because they receive data from multiple sources such as settlement files, order management systems, banks, etc. Each of the files have a different format, but at the end of the day, they need to be cross-checked to ensure that the information available across all these files is in tandem with one another.

The finance team’s responsibility includes transforming these data and then reconciling them. More data processing is required when working with different finance tools used for accounting, tax, payouts, etc. One can only imagine how difficult things would turn out to be when the volume increases. Sometimes the traditional on-premise tools such as excel freeze, running into resource crunch due to a combination of complex logic and volume. There is a high scalability issue. It has integrity checks, sometimes lacks version control, and the ability to correct historical mistakes.

We built Recko to solve this problem. It is built using Big Data frameworks tuned for precision, consistency, and scalability. Recko smartly identifies the data that is fed into the system with the help of pre-defined rules and reconciles at a transactional level. 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.

The first working prototype of our product (codename Perlis) was built by Saurya and myself with the help of a few developers. It took us a few months. Saurya used to take care of product, design, and customer communication aspects whereas I focused on the tech. One of the unique challenges we had was supporting scale at the very start of our journey. We focused a lot on accuracy. That helped us to gain the trust of the finance teams and gave us the confidence to march further.

Funding

So far Recko has raised $7 Million from investors that include Vertex Ventures and Prime Venture Partners.

User base they have achieved till now.

Recko’s financial operations platform is currently used by technology companies across the globe. We work with companies like Grofers, Deliveroo, Meesho, Dunzo, Pharmeasy, Curefit, Udaan, MPL, Khatabook, etc.

Future plans

Our immediate plan is to add more products that will make financial operations a breeze for our customers. We are also constantly adding new features to your reconciliation and commission calculation module to solve complex use cases. Our long-term goal is to provide enough insights that enable businesses to make financial decisions in real-time.