Reserve Bank of India propagating “go-digital” and growth of on-line business eco-system making it imperative for MSMEs to adopt digital technologies.
Cheruku Srikanth, Founder of Digital CFO
In an insightful interview with Mid-day, Cheruku Srikanth, founder of Digital CFO, shared his vision for transforming the financial management landscape for Micro, Small, and Medium Enterprises (MSMEs). He elaborated on the company's strategic transition from an enterprise model to a SaaS-based platform, Digital CFO Version 1.0, set to launch later this year. Srikanth highlighted the technological advancements driving this shift, the importance of automation in bookkeeping, and how real-time data integration aims to simplify compliance and enhance access to financial services for MSMEs. Addressing plans for global expansion, he also discussed the challenges and opportunities of entering new markets while ensuring cost-efficiency and user accessibility.
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1. You’ve mentioned the transition from an enterprise model to a SaaS-based offering with the launch of Digital CFO Version 1.0 later this year. Can you elaborate on the key technological advancements and user feedback that shaped this transition? How do you plan to differentiate your SaaS model from other market giants?
Cheruku Srikanth: The transition to a SaaS-based offering was driven by the need to provide more accessible and scalable accounting and financial management software to the millions of MSMEs which are engaged in the transition from legacy applications and human intensive solutions to digital solutions. With even the government of India and Reserve Bank of India propagating “go-digital” and growth of on-line business eco-system making it imperative for MSMEs to adopt digital technologies, it was clear to us that the time is right to transition to SaaS model and offer our platform at significant scale to the MSMEs. Key technological advancements include cloud-native infrastructure hosted on secure and highly scalable Microsoft Azure, offering enhanced data security and performance. We've also integrated audit trail compliance, which has become mandatory in India, ensuring that every transaction and adjustment made within the system is traceable for future audits. User feedback highlighted the need for simplicity in managing complex accounting & compliance tasks, which led us to focus on an intuitive interface accessible even to non-accounting professionals.
2. Digital CFO emphasises automating bookkeeping at the source, reducing human errors, and facilitating real-time data for MSMEs. Could you share specific challenges you encountered while building this automation layer? What innovative solutions did you implement to ensure accuracy in real-time data?
Cheruku Srikanth: Building an automation layer that reduces human errors and ensures accuracy and compliance at the source was a complex task, especially since we wanted to completely eliminate human intervention in processing entries and posting to ledgers, something never attempted before. Secondly, GST and TDS automation within the application whereby human error in GST and TDS application and accounting has been eliminated, was also a challenging task. To overcome these challenges, we developed a question-answer driven user interface where users answer simple prompts about their transactions, allowing the system to handle tax & internal control compliance and also pass the accounting entry and update the ledgers automatically and in parallel up-date reports and analytics connected to each transaction. This ensures that the data processed is, in real-time, accurate, reliable, and compliant with both financial and regulatory requirements.
3. After launching the beta version in 2019 and receiving feedback from major clients, including Big 4 firms, what were the most significant product iterations or changes that you implemented? How did these insights influence your development priorities for Version 1.0?
Cheruku Srikanth: The most significant product iterations involved enhancing the user interface design to simplify processing of complex accounting entries to deliver accurate, reliable and compliant accounting data that could be leveraged in real-time for up-stream value additions. Additionally the mandatory audit trail requirement in accounting software has been complied with as per the guidelines provided by MCA and Institute of Chartered Accountants of India. Another key iteration is that we made the platform integrate bookkeeping, accounting, tax compliance, internal control compliance, financial reporting, and management analytics into one seamless interface. This means no more switching between different software or modules, no more data inconsistencies, and no more manual errors. For MSMEs this integrated capability is a blessing since they do not need to implement multiple solutions and then spend time to collate and consolidate data from different silos, thereby saving time and cost of accounting and financial management processes.
4. You highlighted your partnerships with banks to offer MSMEs real-time financial services, such as digital loans. Can you provide more details on how these integrations are structured and the tech-driven mechanisms enabling seamless banking services for users?
Cheruku Srikanth: Bookkeeping & accounting forms the source which generates the data that forms the basis for preparing reports and analytics, that the banks require to take credit decisions. Digital CFO generates this data and delivers real-time insights for banks to enable them to offer MSMEs real-time financial services, including digital loans & invoice discounting. The IP protected tech-driven mechanisms include real-time data validation, auto generation of reports and insights as required by the banking partners and significantly reduce TAT for credit decisions.
5. Digital CFO prides itself on ease of use and eliminating the need for extensive training, unlike many competitors. Can you explain how this user-centric design was developed and why you believe it’s a game-changer for MSMEs compared to feature-heavy solutions like Tally or Zoho Books?
Cheruku Srikanth: Digital CFO’s user-centric design was developed with the goal of simplifying accounting and financial management for MSMEs. Over the years, we have developed a groundbreaking user interface that has set a new industry standard, whereby the platform features a simple question-driven interface that asks users about their business transactions, automatically generating the necessary accounting entries, tax calculations, and audit trail logs. This transformative feature of Digital CFO is its ability to enable anyone within an organisation regardless of their accounting or tax knowledge or experience to process transactions accurately. This innovative capability transcends mere transaction accuracy and the generation of balance sheets and tax filings. It empowers us to deliver un-matched value, through automation and with limited human intervention in real-time directly to MSMEs.
6. With MSMEs being a core audience for Digital CFO, what strategies are you employing to ensure your platform meet their unique needs, especially in terms of cost-efficiency, user accessibility, and regulatory compliance? How do you plan to scale your services in emerging markets outside India?
Cheruku Srikanth: We've designed Digital CFO to meet specific needs of MSMEs with a focus on cost-efficiency, accessibility, and compliance. We primarily focused on two key components, namely ease of use and automation of compliance, making it simple for MSMEs to be compliant in terms of accounting and tax compliance, thereby making it feasible for them to gain access to credit products and services of banks. Thereafter we are offering the software only through CA Firms across India whereby the CAs not only becomes resellers but also facilitators for product adoption and usage and for this we are doing complete knowledge transfer to the CA Firms who have collaborated with us. This way the MSMEs can depend on their CA firm or audit firm for adoption and usage management of the Digital CFO software. Lastly we have made the software cloud native and thereby eliminated the cost of dedicated hardware or infrastructure and IT Manpower for the MSME and we have priced the software at just Rs.1500/- per month per MSME with no limit on transactions or branches and allow up to 150 users within this price.
7. You’ve mentioned ambitions to expand to Southeast Asia, the Middle East, and Africa. What are the key milestones or market conditions you are monitoring for this global expansion, and how do you plan to navigate the financial regulations in these regions?
Cheruku Srikanth: For our expansion into Southeast Asia, the Middle East, and Africa, we are closely monitoring several key market conditions, including the growth of digital banking infrastructure, government support for MSMEs, and the regulatory landscape in each region. We are also looking at the readiness of local banks to integrate with cloud-based solutions like Digital CFO. Our strategy involves adapting our platform to meet the specific financial and tax regulations of each region. We aim to provide a seamless experience for businesses in these markets, allowing them to focus on growth while Digital CFO manages their accounting and financial processes.
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