This SaaS startup is making financial management easy for over 45,000 businesses
India's SaaS success story is being led by unicorns like Freshworks and bootstrapped icon Zoho. Be it enterprise Saas or SMB SaaS, or others, the sector is growing in leaps and bounds.
In fact, the Indian SaaS market is forecast to grow from $6 billion in 2019 to more than $20 billion by 2022, according to the India Private Equity Report 2020 by Bain and Co. In this brouhaha of growth forecasts, HostBooks, founded by chartered accountant Kapil Rana, has been quietly and steadily gathering steam.
A chartered accountant by training, Kapil set up HostBooks to enable small businesses to use accounting tools without worrying about proprietary hardware.
An all-in-one accounting application, HostBooks is a comprehensive platform for all accounting needs, says Kapil.
"It minimises time and resource requirements as well as chances of human errors. Running on the cloud, it is available to customers on-the-go anytime, anywhere, curbing IT infrastructure costs significantly."
Conventional accounting processes revolve around book-keeping, banking, MIS, reporting, compliances, internal and external audits, all of which required repetitive work that ties down entrepreneurs. Modern enterprises need on-the-go accessibility of data, secured tools or applications, and data protection.
To fill this gap between conventional methods of accounting and modern needs, Kapil got the idea of HostBooks in 2015, but launched in 2018 after a year of testing in 2017.
The early days
Kapil grew up in Baraut, a small town in Uttar Pradesh, on a family-owned farm. While money was tight, he managed to clear his Chartered Accountancy exams and CPA, while also pursuing his key interest, which was computers. It was this thirst for knowledge and an urge to learn new things that motivated him to establish HostBooks.
"The conceptualisation of the idea goes back to my CA articleship days when we worked on several desktop-based manual data entry software for clients. In such software, the same data was entered at multiple points, multiple times, resulting in multiple outputs. Moreover, as automation and data management processes were missing, meeting multiple compliance deadlines for all clients became a herculean task. Since the software was complicated and had random inflow management, every business depended on professionals in accounting and accounting software," says Kapil.
He realised that manual accounting systems must be replaced for the thousands of Indians businesses still using Excel sheets and paper accounting books.
Moreover, since accountants handle many documents via a manual filing system, retrieving them when needed is challenging.
"The challenges I faced during my articleship persisted in my initial days of practice. All these pain-points led to the idea of HostBooks. Yet, the environment and the compliance-handling scenario were not conducive. But when the government of India began planning the implementation of GST as a one-nation, one-tax reform, I was convinced we could develop our application during this period as it was an ideal scenario," says Kapil.
Today, accounting and compliance is completely shifting to process automation, cloud computing, digital document management, and business intelligence reporting tools – and integrating all accounting and compliance needs on one platform.
Accordingly, HostBooks is making the entire accounting and compliance space simple and automated. Given the economic and tax regime changes in India, the accounting and statutory compliance processes have become more complex and cumbersome. Consequently, SMEs invest valuable resources, time and money in complying with various recurring (monthly/quarterly/annual) norms, instead of focusing on their core business.
HostBooks also allows users to file and manage their compliance-related returns seamlessly without moving away from the application. Being cloud-based, it is available anytime and anywhere on-the-go and resolves the following pain points for businesses:
Productivity: Reducing man-made multi step functions to linear, crisp output, it lifts productivity.
Availability: As the process becomes simple, transparent, scalable and traceable, decision-making is easier and effective. By limiting dependence on key personnel, it prevents job specialisation drawbacks, and makes the process available 24x7.
Reliability: Automated operations ensure jobs are not forgotten or run out of sequence, making them more smooth and reliable.
Performance: As a byproduct of productivity and reliability, performance is immensely enhanced.
Cost reduction: Process automation is a smart and intelligent approach to cost containment and reduction. Through successful automation, operational costs can drop as much as 70 percent.
The business model
HostBooks offers products such as accounting, GST, TDS, income tax, POS and business intelligence tools for MSMEs and professionals. These cloud-based applications make integrated and automated workflow simple and user-friendly, enabling persons with minimal computer knowledge to operate and obtain the desired results. The startup charges based on annual usage of the solution and is sold on a per user basis.
Over a thousand businesses have signed up for the product so far. It also has solutions for businesses and independent professionals (B2C).
HostBooks’ accounting software functions via a simple, single-entry window used for record-keeping that can process accounts receivable, accounts payable, payroll and inventory, among others. It manages all compliance needs and filing of GST, TDS, e-way bills, POS and Income Tax.
It has also integrated almost all banks within its platform, making the bank reconciliation process seamless and with built-in intelligence. It has also helped in reducing the e-way bill generation burden while simplifying GST billing as well as returns and TDS filings with a single-click filing solution.
HostBooks is also great support for professionals such as CA, CWA, CS and accountants through its CAAT and collaborative (single-sign-on) platforms in managing all their clients. "Realising the current need for instantaneous reporting and analysis by owners, it offers highly-regulated, seamless management of finances, which can revive accounting needs within seconds," says Kapil.
In July 2017, when the Indian Government introduced GST, the startup ran a digital media campaign to understand industry issues and received more than one million problem statements.
Filtering these issues, HostBooks allowed users to utilise their beta version app. Later, these beta users became their first set of paid users in the same year. Their first pay cheque was received from Ombir Panwar & Company, Chartered Accountants, New Delhi.
Funding and future
HostBooks is self-funded with Kapil having invested Rs 30 crore in product development and marketing. At present, it is looking for a large round of $25 million to reach 150,000 businesses worldwide. The startup will use these funds for product research and development, marketing, sales and distribution activities as and when it raises it.
"The biggest difficulty was bringing a change of perception to use SaaS. After the evolution and developments in the tax system and reporting structure, people were hesitant to adopt the changes. This was primarily since it meant shifting from old manual desktop accounting systems and physical filing to e-filing and e-documentation. As a result, convincing the initial users was difficult. Gradually, perceptions began changing. Today, clients are adopting the changes thanks to changing business requirements and the new compliance regime," says Kapil.
It is a SaaS-based product business following the open API structure, which connects with any axis with a user-based annual subscription and renewal model.
"Our primary target customers are MSMEs, SMEs and professionals. The multiple changes in the tax regime – from the introduction of GST to frequent revisions in the tax slabs – has opened new business avenues for us. Through our channel network, we have a pan-India presence and are in the process of making this network stronger and deeper. Also, we seek to add around 150,000 paid users even while focussing more on product research and development," says Kapil.
India has over 1.3 crore GST-registered users and around five crore general stores. To tap into the market, HostBooks has two methods of sales – a channel partner network as well as a direct sales team.
In India, it has more than 45,000 customers and is now a registered GST Suvidha Provider (GSP) with GSTN. It has also signed an MoU with the Institute of Chartered Accountants of India to promote automation amongst chartered accountants.
(Edited by Apoorva Puranik)