Have you ever wondered about how technology could impact businesses in the cities you don’t regularly see on screen? Meet Ibu (“Madam” in Indonesian) Ance (pronounced “Ahn-Chey”), an Indonesian woman in Bukittinggi (a tier-two city in Sumatra) that owns three small businesses: a cell phone data and SIM card shop, a fresh pineapple shop, and a convenience store.

Her typical day looks like this: she wakes up at 6 AM in her minuscule one-room bungalow with a waist-height fence and tiny garage, hops on her motorcycle, and makes her way to her first shop. When she arrives thirty minutes later, the pineapple supplier arrives, and she spends time cutting them up for preparation.

During the day, she’ll sell pulsa (mobile data top-ups), as well as Indonesian confectionery and snacks. The customers tend to stop by while driving their mopeds along the narrow dirt streets. During the day, she manually records her transactions, sales, and repayments in her buku penjualan (accounting notebook) with pen and paper. From time to time, she’ll message her husband about how she’s doing at work.

At 5 PM, Ibu Anche closes the shop. Before she returns home via Bukittinggi’s busy streets in the evening, she would take all the cash in hand and then store it at home (not a bank). Ibu Ance then eats dinner with her family, spends some time with her two kids, and maybe watches a dubbed Korean drama – all before setting the alarm on her smartphone to 6 AM and going to sleep.

Ibu Anche is one of the 60 million micro-, small-, and medium-sized enterprises (MSMEs) in Indonesia, accounting for more than 60 per cent of Indonesia’s GDP.

Also read: BukuKas makes book-keeping easy for Indonesian MSMEs to save money and time

They are, quite literally, the backbone of the Indonesian economy, and cover the full spectrum of B2B and B2C businesses: wholesalers, distributors, and small suppliers, the former; clothing shops, credit businesses, bakeries, and grocery stores, the latter.

Archaic business practices thwart MSMEs’ potential

It’s hard being a warung owner. Many of these kinds of businesses are being left behind by the emerging digital ecosystem due to their surrounding infrastructure and inherently simple characteristics.

With a weak cellular connection in tier-2 and tier-3 cities, they’re unable to make use of digital tools that require a consistent connection. And most offerings are too complicated for a warung.

What happens when MSMEs aren’t connected to that digital ecosystem? Just ask Ibu Ance.

Firstly, the lack of any robust credit score means that Ibu Ance is unable to obtain any kind of credit to purchase inventory from telcos or establish a line of credit with selected pineapple suppliers. Healthy, growing businesses in mature economies thrive on credit because it allows them to accelerate their growth by borrowing against future revenues and previous performance.

But in spite of her impressive business growth, Ibu Ance is unable to take a small loan from banks or organised lenders because she has insufficient data to prove her track record.

That credit deficiency also affects Ibu Ance’s customers, who would likely benefit from buying fruit and essentials with credit when they don’t have enough cash on hand. Unfortunately, like many buyers in Indonesian tier-2 and tier-3 cities, they don’t have access to that kind of basic offline consumer credit.

Also read: Everybody is helping MSMEs go digital today, but Indonesia-based Titipku aims to do it differently

Lastly, accounting for small business owners is inconvenient. Manual recording is a hassle, usually done by pen or paper or even text messaging on a mobile device. For businesses managing a lot of volume – or if you’re managing three different shops like Ibu Ance – that arduous process can take anywhere from four to ten hours per week.

The same applies to customer credit, and because merchants can’t sufficiently evaluate customers, much of that customer debt is never repaid.

Why GGV is investing in the rising consumer class

At Golden Gate Ventures, we’ve been investing in Southeast Asia for close to a decade. Our thesis is to invest in themes emerging from the rising consumer-class, ranging from consumer-facing apps such as Carousell, to SME and MSME services that consumers use for daily activities such as BukuWarung, TaniHub, Xendit, and Ruma’s Mapan (now GoPay).

BukuWarung has built a powerful tool for business owners such as Ibu Ance, so she can now track her finances with ease, check repayments, and understand her business better.

BukuWarung is a book-keeping mobile app that effortlessly tracks and analyses all transactions such as credit, expenses, and sales. It provides warung owners, shopkeepers, and entrepreneurs across Indonesia with simple yet valuable insights into the financial health of their businesses through intuitive business reports. More importantly, it provides an avenue for those same business owners and MSMEs to finally integrate with the broader digital ecosystem. 

How BukuWarung impacts businesses’ day-to-day

Ibu Ance’s activities today look very different from just five years ago. Since Ibu Ance started using BukuWarung, she has an exponentially better understanding of her stores. Daily, she still sells her freshly delivered pineapples, convenience items, and SIM cards at her small retail store.

The transformation now, however, is what she does after the workday is done: she checks BukuWarung. In the palm of her hand, she can view her automatically generated daily, weekly, and monthly business reports of all three stores she operates – each of which with rich data that’s easy to grasp.

In the evenings after work, Ibu Ance likes to spare her mobile data usage; conveniently, she can still view these reports, as BukuWarung also works offline. She can even view and manage all transaction data offline too.

Based on these reports, Ibu Ance has a much better insight into cash flows and customer debt. Before bed, she receives a repayment notification from the app to help her stay on top of her store’s finances. With the help of these official records via BukuWarung, Ibu Anche has been able to join the financial ecosystem. She now has three bank accounts: one for money transfers, one for topping up, as an ATM is nearby, and a bank for insurance purposes.

Consequently, Ibu Ance now feels safer with her digitised cash. Today, over 900,000 other merchants experience life-changing benefits from financial inclusion fostered by BukuWarung’s bookkeeping app.

The road ahead

BukuWarung, with its mission to build a digital infrastructure for MSMEs, sets the foundation for merchants’ operational efficiency and enables access to financial services; it opens MSMEs up to the broader fintech ecosystem via technologies that can help these businesses scale faster, generate more income, and find more lucrative growth opportunities.

BukuWarung is an essential vehicle for access to credit and other crucial financial services that the majority of first-tiered city people may take for granted. Ibu Ance’s story is just one of the 900,000 merchants that signed up to BukuWarung.

By and large, digital tools help businesses explore new markets, understand customers better, and become more efficient – the last of which allows them to focus on activities that matter most. Although technological development has been rapid during the past five years, the next five will bring unprecedentedly accelerated improvements, particularly in overlooked Indonesian cities.

With contributions from Timo Fukar

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