Savings, Simplicity, Success: Transforming African Businesses Through Spend Management with Yemi Olulana

[00:00:00] You're listening to the Unlocking Africa podcast. My passion has pretty much been how do we empower businesses in Africa to reach their full potential to unlock the full economic value that they keep growing?

[00:00:12] So once we saw the data show that nine out of 10 businesses died within a five-year time period due to poor financial money, we knew something essential had to be done. So what we did was digitize that entire process,

[00:00:24] eliminating the fragmentation where you can have the approvals and the automation How many of these businesses have skewed their operations in terms of headcount in particular since they started using flex and almost 40% of our businesses last year started using flex but end

[00:00:39] up here. Stay tuned as we bring you inspiring people who are unlocking Africa's economic potential. You're listening to the Unlocking Africa podcast with your host Terser Adamu. Welcome to the Unlocking Africa podcast where we find inspirational people who are doing

[00:01:01] inspirational things to unlock Africa's economic potential. Today, we have another special guest Yemi Olulana who is CEO and founder of Flex Finance which is a technology company that helps African businesses manage their spending more efficiently. Welcome, welcome, welcome to

[00:01:25] the podcast. Yemi, how are you? I'm good. Thanks Terser. Thank you for having me. It's a pleasure to have you on the podcast. How was your day? Good, good, good, good. Sunny day here in Lagos. How about you? Fantastic. Not so sunny here in the UK. I'm jealous.

[00:01:40] So I'm sure you've listened to the podcast before so you know that I like to start from the beginning. So I was hoping that you could introduce yourself and tell us a bit more about

[00:01:54] Yemi. Yeah, sure thing man. Again, thank you for having me. Really great to be on the show. Huge fan of the work you do and I've listened to a couple of other episodes. So

[00:02:04] I think you captured it very well. My name is Yemi Olulana. I'm the co-founder and CEO of Flex Finance and I'm a two-time founder. I built an exteter company before Flex and my passion has pretty

[00:02:18] much been how do we empower businesses in Africa to reach their full potential to unlock the full economic value that they are capable of. My personal big career dashes goals to empower 50,000 businesses on the continent to hire 1,000 people which would create

[00:02:36] 50 million jobs. So which is why the work I do and the work we do at Flex is centered around helping businesses scale their operations, ensuring they can go from little employees to hundreds to thousands and ensure that they can actually continue to be value-added

[00:02:52] as yet a critical engine to move the continent forward. Fantastic. So you've given us some great detail there regarding yourself and your ambitions to empower businesses in Africa and your aspiration to empower 50,000 businesses.

[00:03:08] So if we go from the aspirations to the inspirations, what inspired you to start a company? I think for me right after I left my last startup I was looking for the next challenge at them.

[00:03:21] I've always known I wanted to do something for businesses. It has been a very important aspect of my personal journey and one thing that happened while I was younger, I saw my mom pretty

[00:03:32] much struggle running the business and the issue wasn't around revenue or how money comes in. It was pretty much about how does money hit the business? So I sort of reconnected with the problem when I spoke to over 100 businesses and I saw this prevailing theme around oh,

[00:03:48] I have an idea of how money is coming into the business but I don't know how money is leaving. I'm not sure. I would make X amount in the month, but at the end of the month by the time I finish

[00:03:58] all the reconciliation not a lot is left. So from then on I began to think how do you solve this problem? What do we need to build? What does the solution look like to this problem?

[00:04:09] So after a few iterations we realized that what the business is needed was a spend management solution, which is why we embarked on that journey to a beautiful and relevant institution for businesses in Africa. Brilliant, brilliant. So you've given great insight into why you started the business

[00:04:25] and what you saw from speaking to over 100 businesses. So from those 100 businesses that you've spoken to in the businesses that you're currently working with, what do you see in terms of why efficient spend management is crucial to the growth

[00:04:42] and success of those businesses? So to be globally competitive, you need globally competitive tools. So if you look at consumer spending for example, if a consumer decides to spend recklessly

[00:04:56] permitted to use that word, they can always bring it to the end of the month and to the next paycheck, go from paycheck to paycheck. But a business spending recklessly has greater economy consequence as there will be payroll issues, people will be laid off. That company cannot

[00:05:13] continue to add value and create the necessary employment on the continent. So once we saw the data shows that nine out of 10 businesses died within a five-year time frame due to poor financial management, we knew something essential had to be done to transform and stem this tide

[00:05:30] of businesses dying up because they had poor financial management. So there's been a lot of innovation, helping businesses, supercharge the operations on the collection side, helping them digitize how they collect money, helping them with their record keeping, etc. But where there

[00:05:46] is a lack of innovation, where we saw the gap in the market is this money is coming in all well and good, but we need this same level of intensity and innovation in helping these businesses monitor how money leads their businesses because there are multiple checks and balances.

[00:06:01] Back to the example of consumer, if a consumer wants to spend money, it's one decision maker, the consumer decides, oh I'm going to spend on X. But the business wants to spend money, goes through different checks and balances. This person needs to approve, this person needs to

[00:06:14] check this. And in a desire to ensure accountability, inefficiencies begin to creep in. So that is why we build technology to help smoothen these inefficiencies and ensure that these businesses cooperate very efficiently and scale proportionally.

[00:06:29] So you've highlighted how the spending process in many African businesses are limiting their potential for growth and efficiency. So how does Flex Finance address the challenges of say manual and inefficient spending processes that African businesses face?

[00:06:48] There are two different parts that we've seen in the learning efficiency that flex movements. One is the approval workflow. That is where a lot of inefficiencies existed, as a lot of businesses ended up using manual workflows like in some really, really terrible cases paper.

[00:07:06] Where people literally have to write things down and pass it on along. And the best we saw in many businesses were spreadsheets or Google forms. So this led to a lot of fragmentation in the process. So what we did was we built technology to digitize that entire process.

[00:07:22] So eliminating the fragmentation where you can have the approvals and the automation on one product. The second part is the mode of payments. A lot of them would either need to pay cash or use another payment products, which is pretty much disconnected from the entire system.

[00:07:39] So you now have different silos of data that are not talking to each other. Because after you even got the approvals, you need to figure out how to actually get the payments to the vendor or the employee. I think it's important to highlight here that

[00:07:51] there are two types of business spend, right? There's a payroll spend and there's a non-payroll spend. So we help businesses manage their non-payroll spend, which would be anything from employer embossments to vendor payments. So this complex process of what we need to

[00:08:04] approve if this is a qualified expense from an employee or this is a invoice to go from this vendor is correct to make that amount. We help them smooth the entire process by building a product that helps them digitize their approval workflow. We help them make all forms

[00:08:19] of payments, be it bank transfer, mobile money, card payments, and we integrate with their entire source accounting software, SDRP. So we position ourselves as the central nervous systems of these businesses where they can gather all the essential tools and services

[00:08:33] they need to seamlessly manage their B2B spend on one product. Awesome, awesome, awesome. So you've described how you help companies overcome some of these challenges. So maybe if we look a bit closer at this in terms of

[00:08:46] are there any success stories of businesses that you've significantly helped or have benefited from using Flex Finance to manage their spending? I could go on Tessa. Maybe just share one. So, you know, we get a lot of inbound customer testimonials all the time.

[00:09:07] I think for us, one of the post-trial devices is one of the leading events company, Gary Ligos. They're one of the lenders and fassers when they do things for every big brand or artist you can actually think of. And we actually literally have like a video customer

[00:09:23] testimonial for this customer in terms of how much we transformed their business and brought sanity. We took the entire system from being chaotic to being extremely clear where the business owner can plan and streamline their entire operation. One more I must add

[00:09:38] is one of our customers that had to shut down a branch so they were growing fast and they needed to expand, you know, and they opened another branch. Sales was good but this problem of

[00:09:48] poor financial management, how we manage spending, what's going on here led to huge losses and they had to close down that branch. Right now because of Flex and because of the tools that we've made at disposal of this business, they've been able to open four new branches

[00:10:03] just because you can centrally control how money moves in these different branches but still maintain that distributed entity. So I could go on test that we have lots of different customers that we've been able to transform and bring transparency and ensure

[00:10:17] that they can actually continue to hire more people and ensure that they can drive accountability in their business and drive transparency. And in times like this where inflation, you know, is spiraling they can actually have the visibility to make actionable decisions where

[00:10:31] what costs to cost, what contrasts and negotiate to renegotiate. And yes, so that's a quick overview of numerous customer testimonies. Fantastic. So I read that you enable businesses to save up to 40% on their monthly spend. So what are some of the key features that enable this

[00:10:50] remarkable reduction of spend? So I think one key consequence of using Flex is the visibility it gets. One customer came up on our platform and he realized he was spending about 10 million

[00:11:02] there and something he didn't need to spend on just because he was able to get that visibility because what happened before Flex is that you're not able to find out about things in real time

[00:11:12] more often than not to find out soon dates when the damage has been done, when the money has already been wasted. The way we've seen people use Flex to save money is one, they are labeled to eliminate waste, maybe duplicating voices which was very common in

[00:11:26] many businesses. They pay for something and they end up paying it multiple times. And you know, pretty much getting visibility on how much you're spending on a vendor. So you're able to have the data to renegotiate. We had a customer that was able to

[00:11:39] renegotiate their contract to the vendor say, hey, I spent X amount with you, I should be getting this volume discount. So because we are able to show them where their money is

[00:11:48] going in real time once they log on to our platform, they are able to make these quick decisions that drastically reduces cost. They're able to set budgets and stick to those budgets and say, hey,

[00:11:58] we budgeted X for transportation, we budgeted X for running costs. Our system gives actionable intelligence when you're exceeding the budget, when you're exceeding the time run of what you set to spend on. So this insight and the visibility we give them

[00:12:13] is what drives the cost reduction. Thank you for that. So if you go back in time before you were aware that you could enable businesses to save up to 40% on their monthly spend, what challenges did you encounter whilst trying to introduce this tech based solution?

[00:12:32] So I think it's people are stuck in their ways. They're using the paper system, so introducing technology. But one fascinating thing was that a huge chunk of the customers that we approached had actually tried to find a solution like ours, but there really wasn't

[00:12:48] anything in the market that could critically solve the problem. So that actually ensured we had a ready market that was willing to absorb our product and begin to use it to solve their problem as they pretty much wasn't anything like a spend-marry-event solution in the market for

[00:13:04] a lot of these businesses. But I think one thing we've seen is that businesses are tired of doing business the old way. They've already accepted a lot of technology and automation on the

[00:13:15] aspects of their business in terms of collections, in terms of ERPs and accountants of it, etc. So it's actually been a situation whereby once you are able to align with the key challenges that you are facing as a gas-spend management, the reception has been actually

[00:13:30] really awesome, Tessa. So you've mentioned there that businesses have now accepted that automation is part of their business process and we know that automation and categorization of spending data are essential aspects of your solution. So how does the data-driven approach empower businesses to make informed decisions?

[00:13:54] So I think one thing we've done is we've been using AI for a bit before it became this trendy. But specifically machine learning, helping people categorize, helping people spot anomalies. Let's say for example Tessa, you spend a certain amount of money on less-said transportation

[00:14:12] over a certain period or a certain purchase. And for whatever reason, the bill is maybe five seats, the usual amount you pay for that service will bring it up to your attention. Trying to let that hey, you used to spend let's say 100 pounds on this, we noticed you

[00:14:28] have about spent 300 pounds. We just want you to take a double look. So we pretty much do a lot of this processing for the businesses and the key decision makers, the IDFB, the CFO, the financial controller, the tier of operation and pretty much just take actionable decisions

[00:14:46] immediately. Fantastic. So with the data-driven approach that you described, it gives you access to some detailed data. So could you share some of the trends or insights that you've gained from this data with regards to the spending behavior of African businesses?

[00:15:05] One thing that I would say here, we have a full report on this coming up by next quarter or something. Oh wow. I think what's posted on some of the trends in terms of spend, I would say pretty much

[00:15:16] operating expenditure is up, I think by about over 30% in terms of what these businesses need to spend on primarily because of inflation. We're seeing them need to spend more on especially transportation due to the some of the obvious things you would think of due to

[00:15:32] the fall hike. I've seen them need to react in pretty much proactively in terms of powering their infrastructure in terms of diesel, some of them having to buy a larger quantities

[00:15:43] to try to stabilize the cost. But that also means for example that capital is being tied down. So as I say X to run my office, for example, I get to buy 100 liters of diesel because

[00:15:55] of how volatile this costs my diesel over time. And I probably want to bump that up to maybe 200 or 300 more so I can actually buy that at a stable price and be able to plan. But that means

[00:16:05] more of the cash flow is being tied down to critical things and is unavailable for other parts. So we're pretty much helping businesses navigate this inflation period in terms of how they can judiciously and strategically manage their resources to ensure that they are able to remain competitive.

[00:16:22] You shared the trends and insights that you've gained from a diverse range of companies across a diverse continent, Africa. So what consideration did you have to take into account to ensure flex finance is I guess adaptable and effective across different businesses?

[00:16:42] I think for us right we were obsessed with talking to our customers. We want to know what they're thinking, we want to know what they want, we want to know what challenges they are facing. So we periodically have different types of modes of interacting with our customers.

[00:16:56] Bait surveys, Bait one-on-one, Bait side visits, because we actually want to have as much of a pause as possible and to ensure we are building the right things to help them solve the right

[00:17:08] problems. And I think for us right we are gradually going up market to a situation where by much larger companies are coming to us to solve this B2B spend problem which is very

[00:17:19] very exciting. That also gives us a more data pool pretty much in terms of what to build. And we see the consequence of this not only with these new customers that come in on board

[00:17:29] but with how we are able to server these things customers and how they're excited with some of the things we launch to get their feedback on it. So I think for us right we spend a great

[00:17:37] amount of time interacting with them talking to them and asking the right questions so we ensure that we have the right answers to go on. It's important to ask the right question right,

[00:17:48] you could ask leading questions that give you corrupted answers and oh yeah I knew I was right but we spend a lot of time crafting the right questions to ensure that we kick our biases out

[00:17:59] of the door as much as possible and we get that unfiltered response from our customers to ensure that we're building the right things for them. Fantastic, so you mentioned that you're seeing bigger customers or businesses approaching you to help solve their business spending needs

[00:18:15] or issues. So are there any specific industries or sectors within Africa that you're seeing greater demand for your services? I think you know for us one is the agricultural value chain for example it could be agricultural processing and agricultural farms. We have a lot of demand

[00:18:34] across that value chain that's one. Two is the manufacturing sector and the manufacturing sector is a key sector for us some of the fast-growing manufacturing companies can think of at our customers and our pipeline and also the logistics sector so we have a lot of customers

[00:18:52] from the real sectors that are very exposed to inflation and all the other elements you can think of that makes business operations quite volatile. Brilliant, so you mentioned some key sectors there in terms of agriculture manufacturing and logistics which all contribute

[00:19:10] to the economic empowerment in Africa so how would you say flex finance aligns the broader goals of say financial inclusion and economic empowerment in Africa? I think for us right a key part of financial inclusion is transparency which is one of our thesis. I think the more

[00:19:29] transparency you can drive within an organization the more transformation can take place because transparency drives insights where there's lack of insight, where there's lack of disability you don't have a lot to go on you don't have a lot to make decisions on. So I think for us the

[00:19:47] more these businesses can drive transparency and disability with our solution the more they'll be able to scale right which is a key metric for us it's a it's a vanity metric with trackers flex how many of these businesses have scaled their operations in terms of

[00:20:02] headcount in particular since they started using flex and almost 40% of our businesses last year that started using flex by the end of the year has scaled their operation in terms of personnel in terms of maybe new locations so for us we believe that broader financial inclusion of

[00:20:18] bringing people into the financial ecosystem which a key way to do that is to give people jobs and they'll get paid and you can encourage them to take it digitally as we help these

[00:20:30] businesses which are the core of the industrial revolution we seek on the continent scale their operation I think it's an intended consequence of sort of financial inclusion. Brilliant so you mentioned something key which is transparency drives insight and growth. Transparency is also

[00:20:48] key for collaboration so I was hoping you could probably discuss some of the collaboration and integration aspects of say flex finance with the existing financial systems. I think for us one of

[00:21:02] the most exact developments that happened I think towards the end of last year was the open banking framework that was released by the regulator I think which is a very important move to drive collaboration between fintechs like us and established players like banks very important

[00:21:17] move and I think for us like we partner with the existing financial and infrastructure because we want to make the migration to our solution as seamless as possible so we have a lot of existing

[00:21:30] banking partners that make it extremely seamless and easy for businesses to come up with our solution and just you know start digitally managing their spending and so partnership with the financial ecosystem is pretty key for us working with other fintechs working with banks

[00:21:46] to ensure that this very important mission of ensuring businesses are empowered to spend my advantage solution has all the necessary allies for us to reach these businesses because for us we know how important this is to the industrial revolution we seek on the continent

[00:22:04] and a lot of work is already being done by other players in the market and we want to collaborate with them and not reinvent the wheel to ensure that we are all on the same side

[00:22:13] advancing this mission. Thank you for that as you mentioned integrating with banks and other fintechs has been key we know that the finance industry is heavy regulated so where do any regulatory challenges or hurdles that you have to or are having to overcome in order to

[00:22:32] do what you are doing? So I think we're very proactive with regulation so I think that's the best way to approach the regulators be very proactive and I think for us that has that

[00:22:43] has been an edge for us and ensure that we haven't had these hurdles that you've actually mentioned proactive working regulators, proactive working partners to ensure that our relationship is as seamless as possible to ensure that we have you know dotted out the eyes and crossed all the

[00:22:57] needs necessary for us to have this have the necessary requirements and permissions to empower businesses with the future spend so I think that's what has driven our compliance and our strategies in house. Fantastic so I guess if you stick on the theme of finance investment

[00:23:15] so have you received any outside investment that has enabled you to grow and kind of secure your position within the market? Yes like we raise the price you ground we also receive some great support from the master quality foundation and the actual venture labs

[00:23:33] very well capital Kyra St. Joe's Lofty Inc and Sino Lavender founder of Gumroad, Julian Shapiro so we've actually received some venture capital funding that has made our work accelerated our work to empower businesses to utilize their spending. So if we go back in terms

[00:23:52] of the businesses or customers that you work with and how they were previously spending or in terms of their business spending in your opinion what role do you believe financial literacy plays in businesses being able to make the most out of spend management solutions like

[00:24:12] flex finance? In terms of financial literacy for business owners a lot of them tend to learn on the job and they tend to spot all these gaps and pretty much have like a reactive

[00:24:23] approach to some of these things. So our mission at Flex is to make financial literacy as embedded as possible where you know you could pretty much use a solution that just makes you financially literate right and gives you all the actionable insights and abstract you from the entire

[00:24:40] complexity of whatever path you would have needed to take previously to be financially trained and it's a core of the value proposition that Flex actually offers our customers because they find themselves knowing more about their business which makes them more business knowledgeable

[00:24:58] if they find themselves having more information to make better decisions to know what to like for example one of our customers that I mentioned said the business is actually able to keep more money aside since they're using Flex. So as much as do I spend my investment we've

[00:25:12] actually already impacted the savings of the organizations now where they have sort of like a treasury they can keep money in and you know pretty much manage their spending. So I feel like the way to drive financial literacy in business is to build technological tools that abstracts the

[00:25:29] complexity and just gives them the results like you see how you don't need to be an AI expert to use CharGPT3 for example right? They've abstracted all the different complexity and

[00:25:41] we can all have the benefits of using this amazing technology you know that's how we see ourselves in terms of driving financial literacy. Fantastic so do you offer any type of educational material or content that enables your customers to become more financial literate in business spending?

[00:26:01] We have a great content team that's beyond the implicit knowledge that our products drive us for these businesses based on the insights we provide them. We have a great content team that is sending valuable and important content to our customers via our blog or emails.

[00:26:18] Fantastic fantastic so I guess looking at currently what's happening within the space that you're operating are there any trends that you're seeing in Flex Finance's client business spending that you're currently excited about? Oh yeah in terms of like some of the

[00:26:36] trends we're seeing for example I think businesses are rising up to the occasion and making the necessary adjustments to deal with the current macro environments and I think for us like active-training business that's still alive in this climate to be honest doing businesses

[00:26:51] is already a full contact sport then when you are dealing with the elements like inflation and other rising costs or you're actually you know still being operational something we applaud each of our customers for each day and I think pretty much seeing them rise to the

[00:27:06] occasion seeing them cutting the right cost and ensuring that they operate efficiently is something that we're actually very very proud about Flex as being able to play for the role we've been able to play to empower them to make decisions in this time.

[00:27:19] Fantastic so if we move from the current trend and look at the future future of Africa where do you see business spending in Africa in say five years time what will it look like? There's a report by Brookings Institute that expects spending to go from like

[00:27:35] 1.6 trillion to date over 4 trillion by 2030 which is just like seven years away right? One thing I would say is B2B spending is growing very rapidly and the rate of innovation

[00:27:47] needs to keep up if not surpass that growth rate to ensure that we are able to not only capture this opportunity but empower the businesses on the continent make good use of this opportunity because there's a lot of value to be unlocked in tools that help businesses manage

[00:28:03] that need to be spent just like we've seen the value that has been generated for helping businesses accept money and multiple values in terms of bookkeeping in terms of financing etc. There's a waiver opportunity that can actually be captured by these businesses once this critical

[00:28:19] aspect of their business operation is properly cared for and we're excited to be in this industry and to pretty much pioneer this on the continent in terms of empowering businesses to take charge of their spending. Fantastic, so you mentioned that there is a projection of African

[00:28:34] business spend reaching 4.2 trillion dollars? Yes, I'm only correct. Yeah by 2030 so how do you envision Flex Finance contributing to this growth? Just like how we've seen the advent of digital payments in Africa especially in Nigeria you know giving rise to the rapid increase in online

[00:28:56] payments right. We strongly believe the infrastructure that we are building to help businesses manage their spending is going to accelerate the growth of B2B spend as more of this B2B spend

[00:29:07] is able to come online as more of it is able to become digital as we're able to drive more visibility and transparency in this space. So just like how the NIMS infrastructure for example

[00:29:17] drove the innovation of P2P back to back transfers or the advent of pay stack pretty much unlocked a new horizon of value in terms of online payments because if you look at the

[00:29:29] value of online payments that was being done when it's launched and the value of online payment now this is obvious that a lot of work has been gone in terms of creating infrastructure for the industry to grow. So Flex is doing something similar where we are building infrastructure

[00:29:43] on the continent to help accelerate the growth of B2B spend while we not only create value but are able to capture it. Awesome awesome great work so we're coming towards the end of the conversation

[00:29:57] but there's one question which I ask each guest it's a bit different to the rest of the questions Quote of the week. As people we often have quotes mantras African proverbs or affirmations

[00:30:09] that keep us going when times are challenging or when times are good do you have one that you can share with us today? I think there's one quote that I really love that I think is Shakespeare

[00:30:22] or Divaspera I can't remember why it goes there's a tide in their face of men on which taking upon the flood can lead onto great fortune and it's pretty much centered around capturing

[00:30:34] the wave of opportunities as they come. If you're a surfer right you have to time the wave right to actually ride it and so you can actually get the reward and the glory of riding a great wave.

[00:30:46] There's a great wave of growth in the B2B spend industry and really excited to be riding that wave with my team and I'm excited for the great value that we are an opportunity that we are

[00:30:58] able to capture and the growth opportunities that exist so that's what I'll leave you with Tessa I hope that I hope it was fair enough. That was beautiful thank you for sharing that with us

[00:31:09] as we're coming to the end of today's conversation I was wondering if you have any closing remarks final course or action for people who are interested in the work that you're doing? Yeah I really encourage businesses to think B2B spend very seriously. We want to abstract that

[00:31:26] complexity and that headache of managing it manually and we're here to help we want to support you we want to be your partner in ensuring that you're able to focus on your core business

[00:31:38] your core operation and not have to worry about where your money is going who's spending what you want to help you manage your business spending in Africa no matter where you are on the

[00:31:48] continent or in the world and we'd love to talk to you and we'd love to help so feel free to reach out. Brilliant thank you, thank you for that and thank you for joining us on the podcast today

[00:31:59] your insights into the pressing challenges faced by African businesses in spend management as well as this innovative solution provided by FlexFinance and shed a lot of light in terms of what can be

[00:32:13] done to improve this area for African businesses so it's been a pleasure speaking to you and I've really enjoyed our conversation. Likewise says I had a really great time thank you for having me on the show. Thank you for joining us and we will speak soon. Definitely Joseph.

[00:32:31] Thank you to everyone who has listened and stayed tuned to the podcast. If you've enjoyed this episode please subscribe share or tell a friend about it. You can also rate review us in Apple

[00:32:43] podcast or wherever you download your podcast. Thank you and see you next week for the Unlocking Africa podcast.