Future-ready treasury structure equips Zepto for accelerated growth

With their explosive growth, Zepto encountered a variety of operational issues related to managing their transaction volumes. This not only hindered their ability to provide their signature quick delivery service, but also impacted their adherence to mandatory financial reporting. Zepto sought to achieve the following strategic priorities to ensure they could continue growing their business:

Improve cash reconciliation

With over 1.6 million orders handled daily, there was an urgent need for Zepto to upgrade their systems to manage their large transaction flows and minimise errors in revenue tracking. Any potential solution would also need to be able to handle the projected ten-time increase in transaction volumes, as Zepto pursues their growth strategy.

Reduce manual reliance on payments

Zepto’s payment initiation process remained highly manual. Payments were also only disbursed on a weekly batch-basis, which slowed vendor payouts and increased operational inefficiencies.

Focus on profitability

To keep up with investors’ expectations for the business, Zepto looked to optimise cash flow management, reduce financial losses, and enhance cost efficiency.

Improve corporate governance

In India, companies in scope are subject to regulations known as Companies (Auditor’s Report) Order (CARO), that require them to provide robust financial reporting to ensure that sufficient internal controls are in place. Zepto were still mainly pulling financial reports and bank statements manually from their banking platforms to fulfill these requirements, but this has become increasingly challenging as business grew. Zepto sought a forward-looking approach to automate the reporting process, to ensure tighter compliance.

Zepto embarked on a significant system overhaul with HSBC, with the aim of designing a digital infrastructure that could help them achieve a greater level of automation, efficiency and scalability over their core business processes. The solutions involve:

Adoption of an enterprise resource planning (ERP) system as a central business management platform

With this in place, Zepto can now perform all matters related to transaction and order management, and financial reporting in a single, central platform, which is also designed to sustain increased transaction volumes as business continues to expand.

Host-to-host connectivity is also established with HSBC to facilitate straight-through processing of vendor payouts for faster payments. Detailed payment advice with breakdown of invoices, tax deducted at source (TDS), and debit note adjustments are also made available to enable timely and automated accounting of collections on vendors’ end. These are reverse-fed from HSBC into the ERP, and subsequently reflected on Zepto’s vendor portal, giving real time visibility on liquidity to all vendors.

System integration to facilitate real-time information flow

Zepto established an API connection between their ERP system and the payment gateway on their app to pull transaction information in real-time for reconciliation, allowing for instant release of orders while also enabling Zepto to better project incoming cash flows. The API connectivity with HSBC also allows for bank statements to be automatically extracted to compile weekly and monthly audit reports on key financial metrics, reducing turnaround time for reporting.

Automation on revenue reconciliation

Zepto adopted Virtual Accounts solution to better track ad revenues on their platform. With individual advertisers provided with a unique virtual account number to pay to, Zepto can easily trace the amounts made from each ad, reducing manual effort on revenue tracking and enjoy enhanced analytics on earnings.

Internal working capital optimisation

Through HSBC’s commercial cards program, Zepto can now also extend use of internal working capital to support business needs. This is critical for a startup, where maximising use of investor capital is essential in scaling operations.

High degree of automation

Ensures speed on transaction processing to fulfill their core promise to consumers, while streamlining financial operations to speed up vendor payouts.

Improved cash flow management

To drive revenue growth and reduce absolute losses, guiding Zepto towards profitability.

Position Zepto as a leader in corporate governance

By automating the consolidation of financial metrics and reporting to easily obtain a clean CARO report – a significant achievement for a young start-up.

Access to data to guide strategic decisions

Real-time visibility into transactions, and transparency on revenue sources enhances decision making and operational efficiency.

Scalable infrastructure

Enables Zepto to seamlessly handle increasing order volumes and support geographic expansion.