How Hyderabad-based Recordent is empowering MSMEs with the power of data
The company was incorporated in 2018 but only started operating during the pandemic in 2021. It offers four main products – cRediDue, cRediEye, Legal Notice, and E-arbitration.
The micro, small and medium enterprises (MSMEs) form the backbone of the Indian economy. However, access to credit and credit financing are some of the major challenges faced by this sector.
According to rough estimates, 27-29 percent of the small and medium business (SMBs) operate without any access to formal credit, which leads to a cycle of credit demand. SMEs, being traditional in nature, find it difficult to grapple with these challenges.
Enter which helps small and medium enterprises manage and monitor their credit risks using data. The Hyderabad-based company was incorporated in 2018 but only started operations in 2021 amid the pandemic.
It offers four main products – cRediDue, cRediEye, Legal Notice, and E-arbitration. From helping MSMEs generate invoice reconciliation notifications and create customer credit history to sending legal notices, Recordent India offers a host of services. It claims to have generated over 71,000 invoices, and Rs 2.5 crore worth of business credit reports to date.
In an interaction with SMBStory, Co-founder and CEO, Winny Patro, highlights how Recordent India functions like a credit bureau and builds frictionless products for MSMEs.
SMBStory [SMBS]: What are the key issues you solve for MSMEs?
Winny Patro [WP]: We help MSMEs with invoice reconciliations, delayed payments, improving collections, and more. Our product cRediEye provides insights to MSMEs for their growth, for expanding to new horizons, and onboarding new businesses.
Our research shows that invoice reconciliation is one of the biggest pain points which causes delayed payments. Our platform helps solve that. In addition, buyers don't give importance to paying on time. In a formal setup (like banks), they know that it would not work out because then it will directly affect their CIBIL score.
CrediDue works primarily on a credit bureau model. We encourage MSME to submit all the invoices of the last three years so that we can create a track record for the buyer and they can informed decisions.
SMBS: What are the factors you take into consideration while evaluating MSMEs and creating their credit histories?
WP: To evaluate MSMEs, we have the payment score which gives an overview of the payments done on time and those that crossed the due date. This is one of the prime factors that give an insight into the payment behaviour of MSMEs. Many businesses work with us before onboarding small businesses. They buy reports from us which further help in aiding the decision-making process for businesses that are lending.
SMBS: Digital transformation has accelerated within the MSME sector since the pandemic. Your thoughts?
WP: The number of digital payments increased due to demonetisation, which happened in 2016. In the wake of COVID-19, some of the MSMEs even started working from home – which was unheard of.
But changing the mindset of this sector continues to remain a challenge. We interact with MSMEs daily and they do need handholding when it comes to understanding our processes or data insights. The challenge for them is to leverage these processes and then use them continuously.
Moreover, small business owners usually employ a small team and micro-manages everything. So it’s a question of bandwidth and priorities. Also, we create credit bureaus that help MSMEs scale.
This sector works mostly on credit and that is why an SMB owner mostly gives credit to people which are around and are trusted by him. So, an SME remains an SME for a very long time because they are unaware of any solution.
COVID-19 has been a blessing in disguise for us because there were delayed payments and MSMEs were looking for tech solutions to mitigate the crisis posed by the pandemic.
SMBS: How does your legal product help in solving arbitration issues of MSMEs?
WP: The legal and arbitration products help in recovering customer dues, sending legal notices, resolving customer disputes, and more. Everything happens online and we have partnered with about 22,000 lawyers throughout the country.
SMBS: There are several case studies indicating how Recordent India has helped many MSMEs get their dues back. Can you share one such example?
WP: An auto components company that is our customer was not getting dues or the payments had defaulted from more than 100 buyers.
In a normal setup, the SME would have had to figure out the location of these buyers, then reach out to lawyers – a process that could even take 90 days. Moreover, it would cost them nothing less than Rs 5,000 each. We were able to help them send legal notices to all 100 buyers in less than four days, in some cases even in 48 hours. We helped them disburse these notices at 400 percent less the cost.
SMBS: What are your plans for the next 12-18 months?
WP: From the product standpoint, we aim to become a frictionless product for SMEs. For that, we are focusing on providing plugins and APIs for different accounting software.
In terms of growth, we have 20,000 customers at the moment and we are aiming to reach one lakh in the next 12-18 months.
Edited by Kanishk Singh