The Context:
Cash has seen a facelift in India over the years. Demonetisation caused generational trauma, but also enforced digital dependency. ATMs today have lower footfall than ever and long gone are the days of “bhaiya change hai?” The toffee/mint mafia of center fresh, melody etc. seem to have disappeared overnight, because UPI made hisaab easier. India’s version of “put it on my tab” has always been hisaab. Hisaab’s definition is ever-expanding, and certainly not limited to just accounting. Hisaab is both accounting and cash management, accounts receivables and credit lending, it’s a combination of activities that define the livelihood of all businesses in India, big or small.
Today, there are 60 Million+ small & medium businesses (SMB), 100K+ startups, and a heavy chunk of large enterprises that need to struggle to manage their cash flows, are unable to configure idle cash and treasury management, and routinely fall short of working capital woes.
The language of business transcends size of organization. Invoices are raised everyday, receivables are due every 30-60-90 days, and settlements are made periodically. Delays have become an accepted reality, and financial audits are a stressful endeavor. The trickle down effect of continued complacency has a huge price. The bedrock of our economy depends on the efficient functioning of emerging and fast growing companies, but continues to be trapped by the manual-override faculty on a daily basis.
Cash is King, but Cash Management is God
Cash Management is a complex, continuous, and critical function. Yet, it remains a significant challenge for India Inc. Business owners, CFOs, and finance teams, still rely on manual intervention for seemingly routine and repetitive tasks. An over reliance on manual, sometimes handwritten, spreadsheets continue to plague organizations, who spend days and weeks in desperation for monthly reconciliations and quarterly audits. Cash management is not an intuitive problem, it’s an engineering problem.
The complexity of modern businesses - eCommerce, credit lending, logistics, etc only further exacerbates the inefficiencies in the system. While on the surface it may seem that it’s “business as usual” but these inefficiencies are a lose-lose for organizations, losing money, losing efficiency, and losing time.
- Losing Money: “We miss overdue invoices since we manually reconcile customer invoice payments with bank account credits”
- Losing Efficiency: “Expense approvals happen via email but triggering the bank payment still requires me to manually log in & approve”
- Losing Time: “I want to track where money is coming from & going to daily - but that takes half a day where I have to download bank statements, tag narrations, paste into excel sheets”
Credit where it's due
Cash Flows on aggregate thrive on access to credit. While access to dry powder exists, it’s always a herculean task to access it. Traditional financial institutions have been slow to adapt to newer business practices, and ergo slow to deploy cash for short term requirements.
The credit gap is particularly pronounced for smaller and emerging business models, with low precedence of credit worthiness. Credit worthiness is not a margin problem, it’s again, an engineering problem. Credit worthiness is determined by a variety of factors beyond the basics. The ambiguity of the invoice quality on a case by case basis deters lenders from buying short term receivables, limiting access to modern short term financing solutions such as factoring to companies in India. A use-case which is yet again powered by the ability to track cash flows.
Introducing Valyx:
Introducing Valyx, born out of the necessity of enhancing efficiency of cash management and its interoperable dealings with cash, receivables, invoicing, and more. Valyx is an embedded finance stack for companies that integrates with the company’s existing finance stack. Given that business operations can be diverse, Valyx helps an organization to make sense of the chaos underneath its financial operations and accounting modules. Once integrated, organizations open a world of seamless communication, data-driven insights, effectively enhancing decision making within critical business functions.
Here’s a snapshot of what the platform offers for various cash management modules:
- Cash Flow Visualization: Connecting with a company’s existing finance stack allows access to a holistic view of the company’s cash management cycle.
- Multi-Modal Collections Engine: Collection methodologies can be unnecessarily complicated. Valyx helps businesses identify trends, history, and behavior of debtors and take automated actions to optimize for invoice collections in real-time across channels.
- Centralized Communications Platform: Organizations waste numerous hours on follow-ups, especially for collections! Valyx’s global activity inbox lets each stakeholder access live status and take appropriate actions to improve collections without the need of overlap.
- Ledger & TDS Reconciliation: Finance teams curse work around reconciliation, since tracking bank statements can get very monotonous! Valyx’s AI identifies receipts to invoices and their respective GST accruals to eradicate the need to spend countless hours on reconciliation.
- Financing: The platform builds a contextual Credit Assessment Model (CAM) for the company, curated according to the requirement of the potential lenders (NBFC & Banks) on the platform. The platform will monitor delays in receivables & invoices that can be discounted to offer short term financing options such as ‘Factoring’ in real time.
The Market
APIs dominate the global fintech ecosystem. Globally, 90% of finance leaders have already or intend to incorporate APIs into their financial technology stack. Primarily because, individual tagging and categorization of cash flows into receivable & payable often leads to overlapping of entities and duplication of purpose, creating an inaccurate depiction of earnings & spends and further forecasting them – a costly endeavor. Global market for FP&A software is predicted to hit $16.9 billion by 2031, a steep rise from $3.7 billion in 2021.
Tailored solutions for SMBs and MSMEs is vast and growing, driven by the need for optimized cash flow management, effective treasury management, and accessible financing options. With over 64 million MSMEs in India alone, and only 14% having access to credit, there is a significant opportunity for growth. As lenders increase their loan books to fulfill the unmet credit demand of SMBs, Valyx will become the centralized infrastructure for SMBs to access and interact with multiple lenders for multiple contextual use cases.
The Team:
Building a product that is at par with leading global fintechs has been the ethos of Anirudh & Avishek since Day 0. Having built Stripe in India as early team members, they believe in building easy to use products backed with strong frameworks that solve long-standing problem statements. The team comes with impressive clarity to build feedback looped products that can solve collections, reconciliation, & cash flow forecasting across different sets of customer groups. The duo comes with deep domain experience in revenue automation, receivables management and business payments across organizations such as Stripe, Amazon, SAP, etc, which only adds weight behind them building for this segment.
Fast Forward to 2030:
We envision Valyx to be synonymous with intelligent systems around cash flow management for enterprises, up to date with the ongoing changes in the financial services ecosystem. Its success lies in simplifying, decoding, visualizing current financial health - driven by cash flows. Each organization is different, but the flow of cash remains the same, and hence its innovative, and smart engineered solutions will enable opportunities across not only collections, but also invoicing, payables, financing, treasury, and more.
