Chirag Shah – Founder & CEO, Pulse
As the Founding CEO of Pulse, Chirag Shah leads the company’s strategic direction with a strong focus on product innovation, market expansion, and customer engagement. Deeply involved in product design and development, he ensures that every innovation aligns with long-term objectives. His leadership style emphasizes clarity, accountability, and a culture of growth and empowerment.
By Chirag Shah, Founder and CEO of Pulse
From banks and insurers to logistics providers, pharmaceutical companies, governments, and NGOs, the Software-as-a-Service (SaaS) model has fundamentally transformed how organisations operate and communicate. This article offers practical insights on shifting from reactive reporting to forward-looking financial planning
From banks and insurers to logistics providers, pharmaceutical companies, governments, and NGOs, the Software-as-a-Service (SaaS) model has fundamentally transformed how organisations operate and communicate. What began as a technology shift has evolved into a trillion-dollar industry powering the modern digital economy.
A curious question to ponder would be, how to have something as powerful as SaaS to influence MSMEs. In India, 5.93 crore MSMEs contribute immensely to the nation – nearly 30 per cent to the country’s GDP; employ directly and indirectly about 110 million people; provide avenues to export and precious forex – that is 45.73% to India’s exports.
The impact of SaaS to traditionally run businesses has been nothing short of phenomenal. About fifteen years ago, with the Indian Railways, for example, booking preferential seats or meals of one’s choice was an unthinkable proposition. In fact, booking a ticket itself was a complex and tiring proposition. IRCTC, today, has changed the friction points completely. Technological adoption and SaaS platforms have enabled this transition.
Resolving Credit Invisibility Problem
At a national level, technology has enabled millions of Indian MSMEs. The biggest problem that has been solved is the aspect of financial identity. A significant proportion of small businesses operate in ways that leave little to no formal credit trail. Without audited financials, collateral, or credit history, they remain invisible to traditional lenders.
The stark consequence here is despite contributing nearly a third of India’s GDP, MSMEs account for less than 20% of formal credit disbursed by scheduled commercial banks. The gap between what MSMEs need and what the formal credit system offers them has historically been bridged by informal moneylenders at unviable interest rates.
This is where SaaS-based financial platforms are beginning to rewrite the rules. When an MSME consistently uses a digital platform to manage invoices, track receivables, and reconcile accounts, it generates something invaluable; a structured, time-stamped record of business activity.
Lenders and NBFCs are increasingly recognising this data as a proxy for creditworthiness. Cash flow-based underwriting, which evaluates the rhythm and reliability of a business’s inflows and outflows rather than just its balance sheet, is gaining ground precisely because SaaS platforms make such data legible and verifiable. For a kirana store owner or a small textile exporter, this shift could mean the difference between securing working capital at a reasonable rate or being shut out of the formal credit ecosystem entirely.
Account Aggregator Framework:
India’s Account Aggregator framework, launched under the Reserve Bank of India’s guidance, is yet another example of a consequential financial infrastructure developments for MSMEs in recent memory. At its core, the framework allows businesses to share consented financial data, bank statements, GST returns, tax filings across institutions in a standardised, machine-readable format. What once required weeks of paperwork, branch visits, and document notarisation can now happen in minutes, with the business owner in full control of what is shared and with whom.
For SaaS platforms serving MSMEs, the Account Aggregator network is a significant enabler. Platforms can now pull in a richer, more accurate picture of a business’s financial health, not just from internal transaction data but from across the banking and tax ecosystem. This multi-source data environment dramatically improves the quality of predictive models. Cash flow forecasts become more reliable when they are built on actual bank movement data rather than self-reported figures. Credit risk assessments become sharper when GST filing patterns and bank statement trends are analysed together.
The downstream benefit for MSMEs is considerable. Financial institutions plugged into this ecosystem can make faster, more confident lending decisions. Loan turnaround times that once stretched to weeks are compressing to days. For a small manufacturer managing seasonal inventory cycles or a service business waiting on delayed receivables, access to timely credit is not a luxury, it is operational oxygen. As more banks, insurers, and fintech lenders integrate with the Account Aggregator framework, the MSME that has adopted a SaaS-based financial platform is uniquely positioned to benefit because its data is already organised, current, and shareable.
WHAT AILS INDIAN MSMEs
A revolution the size of IRCTC may take time to charter, but it is evident that to influence such a transitional change, we understand the typical problems with MSMEs. The biggest problem or challenge with MSMEs is the limited access to accurate financial foresight. This is a recurring theme, given a 2023 report by the International Finance Corporation, nearly 40% SME failures globally have been attributed to poor financial planning and inadequate cash flow management.
Most SMEs have relied on spreadsheets, retrospective accounting, and intuition-based decision-making. This also is a factor for the conventional financial planning for SMEs being dependent heavily on historical data and static assumptions.
Cash flows with MSMEs are great tools today, however, there is no accuracy in these estimates since the business could be cyclical. A typical small business owner might review quarterly statements, track cash flow manually, and make budget decisions based on past performance. Such an approach fails to account for real-time market shifts, sudden demand fluctuations, or emerging cost pressures.
The integration of predictive analytics into SaaS-based financial platforms is now enabling SMEs to move from reactive management to proactive strategy, with measurable improvements in forecasting accuracy, risk mitigation, and capital efficiency.
How Different is Predictive Analytics?
To a large extent tools such as predictive analytics can enable MSMEs. SaaS platforms powered by machine learning algorithms and real-time data integration can generate forward-looking financial insights with a degree of precision that was previously unattainable.
While a lot of it is premised around the ability to analyse historical transaction data, market trends, customer behaviour patterns, and external economic indicators; there’s also an outward looking integration. That is, peer comparison, systems which can benchmark with external data-points for validation can be a great tool to forecast real revenue trajectories. These could also enable the anticipated expense fluctuations and accordingly model diverse business scenarios simultaneously.
LEVERAGING SaaS
Integration with predictive analytics can help several business functions – point-of-sale data, inventory turnover rates, seasonal demand patterns, and even local economic indicators to project cash flow needs for the coming quarter. This is a level of insight that was once available only to enterprises with dedicated finance teams; today, it is accessible through a monthly subscription.
Cash flow uncertainty remains the single largest cause of SME distress. A Niti Aayog & Institute for Competitiveness report reveals that nearly 52% of small businesses experience cash flow gaps at least once a year, and 18% cite cash flow problems as a primary barrier to expansion. SaaS platforms with predictive capabilities address this by generating rolling cash flow forecasts that extend weeks or months into the future. Studies around the globe have indicated how cloud-based financial tools with predictive analytics are relevant to MSMEs. In Croatia, for instance, MSMEs leveraged business intelligence to reduce time to reconciliation while in US and Nigeria, predictive analytics improved cash flow visibility.
SaaS platforms, and those enabled by AI-driven financial forecasting reduced forecasting errors by a margin of 30 to 50% according to a study by McKinsey. The research also found that SaaS platforms enabled businesses with improved working capital efficiency of up to 10%. Additionally, research from Gartner indicates that organisations employing dynamic financial planning techniques are 2.6 times more likely to outperform their competitors in revenue growth. For SMEs, this agility is particularly valuable.
Better Compliance
It is an assumption that since SMEs are smaller, the impact to external shocks is limited. Unfortunately, SMEs are as vulnerable, if not more, to financial shocks than even larger corporations. Limited capital reserves and restricted access to emergency funding means access to predictive analytics can be a boon with compliance and ability to get early warning.
Many platforms, in addition to internal data also provide a glimpse of external indicators such as regulatory changes, market trends, customer payment behaviours and other predictive models to detect anomalies. These could be a sudden slowdown in receivables, a spike in customer churn, or an unusual pattern in expense growth triggers alerts, allowing business owners to intervene early.
Perhaps the most underappreciated benefit of predictive SaaS is its ability to deliver personalised financial guidance without human intervention. Large corporations employ chief financial officers and teams of analysts to interpret data and recommend strategy. SMEs typically have neither the budget nor the talent pool for such resources.
The Road Ahead
As artificial intelligence models become more sophisticated and industry-specific, the next generation of predictive SaaS will offer even deeper integration. India is entering a newer realm with SaaS and MSMEs, where new-age futuristic platforms will benchmark SME performance against anonymised sector-wide data.
For Indian SMEs, accessing such SaaS platforms could be a timely intervention to grow better. The new era of personalised financial intelligence for businesses could be a fundamental reimagining on how businesses navigate uncertainty, allocate capital, and pursue growth.
