Harsh Pokharna, Co-founder and CEO, OkCredit

OkCredit’s strength lies in its robust, feature rich product that improves the transparency in business transactions and helps in building a higher degree of trust among the participating individuals.

Feb 12, 2021 07:02 IST India Infoline News Service

In an interaction with Shweta Papriwal, Editor, indiainfoline.com, Mr. Harsh Pokharna, Co-founder and CEO, OkCredit said, "As adoption of digital bookkeeping solutions is predicated upon positive word of mouth, we are constantly evolving and improving by inculcating customer feedback to provide better experience".

Tell us about OkCredit’s journey so far. What makes OkCredit one of the leading digital bookkeeping tools in India?

OkCredit is a mobile-based solution for small business owners and their customers. It aims to reduce the merchant's burden of maintaining paper account books, through digitisation.

The app provides on-demand visibility of credit record for merchants and enables credit payments digitally across the country. To solve the trust problem, once a merchant registers a transaction on the platform in a customer’s name, the customer is simultaneously informed through text or WhatsApp. This app also allows merchants to send collection notifications to customers in case of delayed or missed payments.

The idea began to germinate in our mind when we (the founders) decided to track our payments to a grocery store that we used to visit frequently. It used to take a long time then to settle our monthly dues as the settlement was made after verifying entries from ledgers, small notes maintained or from scribbled prints.

To begin with, we managed to convince the shop owner to track our payment through OkCredit. Initially, the owner had his own doubts and concerns which we helped in solving by spending time to generate reports daily so that he could verify with this ledger book. After a few days of trial, the owner soon added a few other customers.

The next step was to convert the existing accounting system into a format compatible with OkCredit. This happened after we sat down with the owner to add all his customers and their balances to OkCredit. There was no looking back for OkCredit after that, as the store instructed its employees to use the app for all transactions.

OkCredit’s strength lies in its robust, feature rich product that improves the transparency in business transactions and helps in building a higher degree of trust among the participating individuals. Also, OkCredit app is completely free to access and ensures 100% safety, data security and accuracy. This has helped OkCredit to not only deliver better customer retention but also generate positive word of mouth through merchants who have found the platform to be simpler and easy to use leading to a strong referral triggered growth pattern.

As a result of best-in-class user experience, merchants/retailers today see OkCredit as an integral part of their business. With 5.5 million registered users, It witnesses over three million daily transactions on the platform. This is further validated by the fact that post-Covid recovery of OkCredit usage has mostly been organic.
Briefly describe the revenue / business model of OkCredit and how it works?

OkCredit was founded with an aim to change bookkeeping habits of India’s smallest merchants like Kirana store owners, paan shops, medical stores, and laundry service providers, among others. The idea was to move millions of these retailers from a traditional ledger based system to a tech enabled one, where every transaction could be visualised on a mobile app.

Any small merchant with the OkCredit app can see a credit log of all his customers on a single screen. Once a credit transaction gets recorded on the app,  the customer also gets a notification reminding him of his payment due to the merchant. The payment can be done digitally via a link generated in the same message. This improves transparency in business transactions and facilitates a higher degree of trust among the participating individuals.

Brief us about OkCredit's operations in India and overseas market.

OkCredit can be accessed in more than 10 Indian languages- Hindi, Tamil, Telugu and others and its users are spread across 100 types of businesses like kirana store owners, mobile recharge shops, medical stores, apparels amongst others in 2,800 Indian cities. This app has been downloaded more than 20 Mn times till date, has over 5.5Mn active monthly users pan India and recorded monthly transaction volume of $7 bn in September 2020.

We have maintained a razor-sharp focus on building a robust, feature rich product that simplifies the lives of small business owners and makes them competitive. This has helped us to not only achieve better customer retention but also generate organic growth without spending a lot on customer acquisition.

OkCredit has raised $83 million till date and is backed by Lightspeed Venture Partners, Tiger Global, and Y Combinator.

What is the impact of Coronavirus outbreak on the overall digital bookkeeping segment? Can you share a brief outlook and recovery prospects for your business? What are the emerging trends?

Just like any other business , digital bookkeeping segment too had to go through its ups and downs amidst Covid pandemic. This is now however changing with business activity among the micro, small and medium enterprise sector fast reaching near normal levels and rapid adoption of digital business tools to drive efficiency and growth.

The above trend is particularly strong in small towns and hinterlands where, in the unlock phase of Covid pandemic, OkCredit witnessed strong recovery in demand for its app from tier 3 cities followed by tier 2 and tier 1 cities. OkCredit’s business from tier 3 cities witnessed 33% growth in the period of February - September 2020 while Tier 2 and Tier 1 cities registered 30% and 28% growth respectively during the same time. This is after a dip of 26%, 31% and 38% in business from tier 3, tier 2 and tier 1 cities respectively in April this year.

On a pan India basis, data among the digital bookkeeping users points to a sharp recovery with smaller businesses in tier 3 and tier 2 towns growing faster than tier 1 cities. Sixteen of thirty-six states and union territories have recovered to business activity levels that are higher than pre-Covid times. Bihar, Haryana, Assam, Rajasthan, and Himachal are the states where business activity is 10+% higher. Out of the 19 states that are yet to recover, Karnataka, Maharashtra, Gujarat, Andhra Pradesh, Tamilnadu & Delhi are trending at 90–95% of their pre-Covid activity levels.  

At a business category level, different magnitude and pace of recovery was observed by OkCredit since February 2020. The company witnessed double-digit growth in business from medical and kirana stores at 21% and 15% respectively in September 2020. This was after a dip of 12% in business from medical stores and 22% from kirana stores in April this year.

How has OkCredit been able to manage the COVID-19 crises?

OkCredit is built on the premise of making bookkeeping simple and hassle-free for merchants, so that small businesses in India can become efficient and achieve faster growth. While COVID accelerated digital adoption in general, we have seen solid recovery,  thanks to this aspect and good growth coming our way.  As people moved from high touch to no or low touch ways to do business, companies like ours were best placed to reap the benefits of this transformation.

We have doubled our efforts during the COVID-19 crisis to create awareness about our digital bookkeeping app and the convenience it brings to small businesses. This is besides launching  an innovative new solution called OkShop. OkShop enhances the ease of doing business for small merchants by allowing them to set up their online presence. We have also undertaken focused campaigns to engage business communities during the crisis period, onboard new customers, and increase usage of the app.

These steps have yielded desired results with business activity among the micro, small and medium enterprise sector rapidly adopting our solutions to drive efficiency and growth. The demand for our solutions is particularly strong in small towns and hinterlands followed by tier 2 and tier 1 cities.

What are your future plans?

At OkCredit, we are focused on delivering value to our customers through our proprietary digital bookkeeping solutions. We intend to expand  by reaching out to small businesses who are not aware of our products and services. This is in line with our corporate vision which is to help real India get the benefits of digitization.

We have already launched two new products last year- OkShop and OkStaff. OkShop allows small businesses to set-up their online presence there by enabling them to reach their potential customers directly. OkShop will help small businesses create product catalogues with images, description and pricing, secure online payments, and easy sharing options of the inventories and offerings on WhatsApp.
OkStaff, on the other hand, automates business workflows with simple, easy-to-use solutions througha free to use staff management app that lets small business owners manage their employees’ salary, payments, attendance etc.

Both these products are new in the market. We would like to grow them and make them an integral part of the small business life cycle. Our long-term plan is to take our products global to help small businesses everywhere in their digitization journey.

What is the current market size of the digital book-keeping industry in India? Who are the other main players?

Bookkeeping and accounting are essential functions of a business. All businesses use a paper-based accounting system and do bookkeeping by hand especially when they are starting out or their turnover is small. At OkCredit, we are digitising the entire space and by solving the first few use cases of receivables and payables tracking, we are already looking to get more than 50% of them on OkCredit.
We believe digital bookkeeping is a very strong entry point into business digitisation. This segment will help us become a core pillar of the new digital economy and create new markets thereby expanding the overall opportunity size.

The other players in the industry are OKKhata, Paytm Business Khata, Dukaan, Bikayi etc.

What is driving the growth of digital book-keeping in India? What are the challenges and how do you plan to surmount these challenges?

The sheer fact that digital bookkeeping solutions have made the life of small business owners a lot easier is the primary driving force behind its growth in India.  The trust and transparency that we have built has helped us create an organic pull for our offerings.  We have relied more on digital tools for our user growth as opposed to the traditional feet on street approach and that has given us both- cost effectiveness as well as scalability. This growth is further supported by better digital literacy, mobile penetration, and internet growth in the hinterland.

Every industry has its specific challenges. It’s no different in digital bookkeeping. We face one of the hardest challenges – changing an age-old habit and getting small business owners to believe in the power of technology. We try to surmount this challenge by making the digital bookkeeping experience as user friendly and as efficient as possible.

As adoption of digital bookkeeping solutions is predicated upon positive word of mouth, we are constantly evolving and improving by inculcating customer feedback to provide better experience.

How is the digital book-keeping industry expected to evolve in India?

Small and medium enterprises (SME) are gradually switching to digital book-keeping apps to record their business transactions. According to a SME survey conducted by RedSeer last year, over 50% of all transactions are recorded using book-keeping apps, by a significant number of SMEs.

Adoption of digital bookkeeping among small businesses is expected to grow progressively in the coming years due to better digital literacy, mobile penetration, and internet connectivity growth into the hinterland.

Positive word of mouth by merchants who have experienced digital bookkeeping tools is already driving the adoption of digital bookkeeping tools among small businesses in remote towns of India in a big way. This trend is going to gather more pace as more and more merchants get comfortable with such solutions.

In future, we expect digital book-keeping to be the norm in India. And as it expands across the country, we expect the digital platform to integrate and blend with other digital platforms like e-commerce. This will not only enable small business owners to compete with their bigger competitors but also grow and expand their business online.

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