August 2015 was a red-letter day for my co-founder, Raja and I—that’s when we started our journey at Freshworks taking up key positions in engineering and product management respectively.
As Freshworks grew, we had front row seats to see complexity unravel when the company hit the hyper growth phase. You see, the revenues were growing at a breakneck pace. So was the customer base and the number of products in the suite. But on the other hand, it was not easy to collect money from customers. A team of 28 collection owners would handle 18,000 invoices a month! To say that it’s disproportionate would be an understatement.
While functions like GTM hogged all the limelight, there was a dark corner in the room that needed some light to be shone on–collections. Hiring a larger team was definitely not the solution. How much can a business linearly scale its collections team? Surely, the resource costs would shoot up. The solution, as I discovered, lay in using technology as a means to help the Accounts Receivables team do a better job. The reality was that this was a space that had not been innovated for.
The global B2B payments were worth $125T. In the US alone, expected B2B payments were as high as $25T while B2C payments made up $4T. However, all the innovations I could see had come up in the B2C space, like ecommerce payment gateways like Stripe and Paypal, and subscription and recurring payments solutions like Zuora. Most of these solutions had simplified the way subscription payments were handled. However, non-subscription payments still happened through wire transfers, checks (Lockbox), and ACH.
This got me thinking—shouldn’t it be the other way around?
The unfortunate reality is that the world talks a lot about GTM, fundraise, ARR, NRR, etc but little about cash and working capital, which is the aorta of a business.
As the business grew at Freshworks, with increasing complexity, the team began managing their Accounts Receivables with generic systems and this led to broken workflows.
These disparate systems would not talk to each other so this was heavily compensated with the use of spreadsheets, Slack messages and the Tableaus of the world. Teams would resort to a duct-taped solution (Zapier for the win). Expectedly, this choked the order-to-cash funnel.
Discovering the iceberg underneath—the broken middle
In 2020, Raja and I decided to take the plunge—we quit Freshworks to startup. We had seen the tip of the iceberg. It was time to dive deeper and attach a size to this problem.
The market discovery process gave us some really interesting insights (and connected us with some wonderful humans around the world who believed in us!) I spoke to 200+ finance professionals across the globe and spent 300+ hours hearing them talk passionately about their problem.
I began to see a pattern emerge from these conversations—90% of the companies I spoke to managed their Accounts Receivables outside their ERP. When their customers received the invoice, they would seldom make the payment upfront. Usually, the finance team had to follow up multiple times before customers made the payment.
And there were multiple stakeholders involved in the process, like sales and customer success teams. When customers did not pay despite receiving multiple reminder emails, the collections team escalated the account to customer success. This usually happened via email or Slack, with Google Sheets as the source of truth. The problem was that it was never a single Google Sheets doc. There were multiple sheets shared every single day, and every collection owner and Customer Success Manager maintained one. Talk about siloed working…🙄
When customers did finally pay, the CSM did not have a clue about it. They would go back to the customer and end up asking for payments again, which was a subpar customer experience. When you want to upsell to the customer in a few months, you want their experience to be top notch.
The CSM or the Account Manager would end up following up multiple times with finance if the payment has been made. The finance team too made countless follow-ups with the customer-facing teams to check if they had followed up.
Oftentimes, there were disputes that happened due to an incorrect line item in the invoice or if the customer believed it so. We realized that there were no systems to capture these disputes or promise-to-pay as actionables in a system that would act as a single source of truth for all the stakeholders involved.
Clearly, lack of visibility in a siloed process was leading to high inefficiencies. Naturally, the booked revenues to realized cash ratio went for a toss in such companies and the DSO ended up being quite high.
We discovered that there was a broken middle in the entire invoice-to-cash process that was seemingly less cared for. Surprisingly, we also discovered that starting from the transactional layer where payments were handled to the record-keeping layer which involved accounting, book-keeping and invoices, to the workflow layer where AR tracking happened, every layer had its own bunch of inefficiencies and problems waiting to be fixed.
Stumbling onto a bigger vision
This revelation led us to build the world’s first Finance CRM. The AR workflow layer was a great starting point for Growfin. The AR team was genuinely paying for the inefficiencies and lack of predictability with poor productivity and insane work hours. Clearly, there was a need for a purpose-built CRM. We were dealing with a front office-like activity within the back office function.
But it also raised a bigger question about our future—
What if there could be a system that can help replace all of these pointed systems and be one B2B solution for the CFO? I decided that this would be our vision.
And that is how I decided to go after solving this problem for Accounts Receivables teams. Unlike the famous startup stories, my aha moment did not happen at a cafe or during a shower. It grew over me after countless conversations. Everyone I had spoken to was narrating the same story and driving home the same point.
At the end of the day, every business needs to make cash. And it hit me, “Oh damn, indeed there’s no better or easy way to collect cash today. And cash is indeed king!” What better way to
What’s next?
We’re going big in the next one year as we hit a phase of hypergrowth. We are looking to increase our customer base by 10x in 2022, a growth that seems doable today considering that we’re seeing great signals of product market fit.
In the last few months, we have doubled our customer base. And the best part is that 50% of our customers are unicorns, which is a shot in the arm for us.
In our perspective, everyday is day zero for us.
We’re building our go-to-market engine, with the team and resources needed to make our vision of building an integrated solution for the CFO’s tech stack a reality. And we can’t be more excited!
