How two Indian entrepreneurs are helping Indonesian businesses manage credit

By Lee Kah Whye
Singapore, July 6 : Indonesia is a vast archipelago of over 17,500 islands covering 1.9 million square kilometres and it is the world's 15th largest country by land area. The country is also home to over 270 million people, many of whom live in the over 500 cities spread over 34 provinces.
As Chinmay Chauhan and Abhinay Peddisetty travelled through Indonesia, speaking with over 400 small businesses, they realised that many of these businesses, especially grocery shops and food stalls in the smaller cities and towns were transacting with their regular customers on credit. At the same time, they were laboriously keeping records using pen and paper. The soon-to-be business partners sensed then that there was an opportunity to help these business owners with bookkeeping, credit tracing and accounting.
From what they learnt, together with an Indonesian partner, Adjie Purbojati, Chauhan and Peddisetty went about to help these small businesses digitise the recording and collection process with a simple bookkeeping app, BukuWarung. Launched in 2019, BukuWarung (Indonesian) literally translates as "Book Stall".
The main consideration for the app design was to be "lightweight" and for it to consume as little data as possible since many of these merchants are on prepaid plans, use devices that are low-end smartphones and operate in areas where wireless bandwidth is limited. Furthermore, the app had to work offline so users could access and update their records anytime.
Due to the culture in Indonesia as well as the fact that many of these merchants are close to their customers, they do not chase their customers when the bills are due for payment. What the app does for them through automated notifications is to "gently" remind customers when payment is due.
According to the startup, those merchants who have used the apps have received payments at a rate which is three times faster and they have seen increased cashflows as a result. They also experienced an average savings of USD 6.70 on bookkeeping expenses.
The co-founders first met each other while working in Singapore at Carousell which is an e-commerce platform for selling and buying of second-hand products. They were working on developing monetisation products for sellers.
Abhinay Peddisetty is an Information Systems graduate from the Birla Institute of Technology and Science and has worked at Hitachi Consulting in Hyderabad. Chinmay Chauhan is a Computer Science and Engineering graduate from the Indian Institute of Technology, Bombay, and has worked at Microsoft as well as Grab, which is the largest ride-hailing and food delivery company in South-East Asia.
The inspiration behind BukuWarung is their families, both of whom operate small neighbourhood stores.
BukuWarung estimates that there are over 60 million MSMEs (Micro, Small and Medium-sized Enterprises) in Indonesia. Since the launch, they have signed up 600,000 merchants across 750 cities and towns in Indonesia and currently the app has about 200,000 monthly average users. The co-founders say their goal is to reach all 60 million MSMEs in Indonesia.
Chauhan was quoted by TechCrunch as saying, "We can look at this more deeply given the experience we have monetising merchants at Grab and Carousell. We also know the good potential exists in Indonesia, where we can help 60 million micro-merchants come online and digitise. From a macro level, we felt this would be a huge opportunity. There is also the personal element of potentially being able to impact millions of merchants."
Chauhan and Peddisetty further added that their goal is to expand the company to financial services as well, mirroring what KhataBook and OKCredit have done in India but for Indonesian merchants. With an electronic system for tracking transactions include credit, expense, sales, cashflow and business reporting, they are hoping that it will become easier for merchants to gain access to lines of credit from financial institutions. The aim is to start with bookkeeping and later give users access to online payment systems, including digital wallets and financing.
BukuWarung is currently taking part in Y Combinator's startup accelerator programme. They have also raised seed funding in a round lead by East Ventures. Investors in that round included AC Ventures, Golden Gate Ventures, Tanglin Ventures, Samporna, as well as strategic angel investors from Grab, Gojek, Flipkart, PayPal, Xendit, Rapyd, Alterra and ZEN Rooms.
The effectiveness of their app was proven during the Indonesian COVID-19 lockdown between April and June this year. As most of its users are small businesses selling daily essentials like groceries and food, and with the COVID-19 pandemic restricting economic activity, more and more of their customers' cash flow became tight as they either do not have a regular income or have been furloughed.
Many people were buying on credit and the BukuWarung app's usefulness became apparent as such credit-based transactions increased. Therefore, it was not surprising the number of users of the app grew during this period and will continue to grow as the economy recovers.