Home >News >Business of Life >Accounting apps take fintech straight to mom-and-pop stores

It’s not surprising to see so many players offering to digitize accounting for micro, small and medium enterprises (MSME). The tag covers a variety of businesses, from kirana stores and small manufacturers to those with an annual turnover of 250 crore under the government’s new definition.

The relatively bigger ones use full-fledged accounting software like Tally, which is a favourite with accountants. The vast majority of the others in the micro and small business categories still use paper khatas for accounts, but there’s a move towards simple bookkeeping apps in the last four years.

“The market for accounting and bookkeeping apps is still wide open," says Asutosh Upadhyay, investment professional at Axilor Ventures. “How you target, how you market, how you sell... all these things are playing out. And considering it’s a very long tail, it’s difficult to pick up signals from the market on which product is getting accepted."

The best funded ones are Khatabook and OKCredit that received $60 million and $67 million respectively in their series B rounds. They provide a simple digital ledger to keep track of dues and send payment reminders, thus targeting one of the biggest pain points for a micro business.

Khatabook boasts of 10 million installations of its free app. Its strategy has been to scale up fast without worrying about revenue. Presumably that will come later in some form of leveraging a huge customer base and data.

Easy entries

“What Khatabook and OKCredit are doing by remaining simplistic is bringing down the literacy required for adopting digital tools," says Dharmesh B.A., head of D91 Labs, an initiative by fintech API provider Setu to bridge the “empathy gap" between product developers and their users in the so-called Bharat or India’s vast hinterland. “These apps have been smoothly integrated with the day-to-day lives of store owners. They’re also available in vernacular languages and customer support comes on WhatsApp."

While Khatabook has been ratcheting up customers and funding, others like Vyapar and Gimbooks have taken a different approach. They too are mobile-first and cloud-based with simpler user interfaces and workflows than desktop software like Tally. But they aim for a larger digital footprint than a plain ledger app. That is, they provide a range of features from invoicing and billing to GST filing and inventory management, while keeping their user interface simpler than traditional accounting software.

Their target would be small businesses, including both traders manufacturers, rather than the super micro mom-and-pop stores. These are customers who would be willing to pay for tools that help them manage their businesses digitally, even if they’re simpler and cheaper than Tally.

Both Vyapar and Gimbooks have a desktop version for higher end users, apart from their mobile apps. Gimbooks offers a free trial followed by a range of subscription plans. Bengaluru-based Vyapar raised $5 million in funding last year, which is modest compared to Khatabook and OKCredit whose total funding is close to $100 million each. Gimbooks, based in Raipur, Chhattisgarh, remains bootstrapped, relying on paying customers to grow.

A revenue-based model tends to sharpen the value proposition. Gimbooks, for example, has modified versions of its product for nine different verticals. As soon as a new user selects a vertical, the user interface and features customized for that sector appear.

“Customization is the need of the day," says Yash Agrawal, founder and CEO of Gimbooks. “Invoices vary from industry to industry. For GST filing, the fields required for a distributor of goods are many, including e-way bills, transport details, delivery challans etc. It’s not so complex for services businesses that don’t require 20-30 fields to be entered, but they want a fancy-looking invoice with their name and logo. A pharma trader has specific needs because batch number and expiry date become important."

Integration is key

Another trend is the integration of banking into bookkeeping apps, as banks open up APIs (application programming interfaces). “We have tied up with ICICI Bank. So if you’re an ICICI Bank customer, you can access your account from our app, see your balance, make vendor payments," says Agrawal.

Integration also means more competition as a variety of players from B2B marketplaces like Udaan to payment apps like PhonePe offer bookkeeping or ledger maintenance in different forms. The likes of Khatabook, which initially focused only on a digital ledger, may also broaden out into full bookkeeping. There’s no dearth of choice once a small business is of a mind to go digital today.

Malavika Velayanikal is a Consulting Editor with Mint. She tweets @vmalu

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