A Bengaluru-based startup founder has raised serious concerns over alleged discrepancies in accounting entries on Zoho Books, claiming that failed transactions were incorrectly recorded as successful payments.
Founder flags mismatch after audit
Azeem Hussain, co-founder of checkout platform FlexyPe, shared his concerns publicly, stating that the issue came to light during a manual audit of March transactions. He claimed that payments which had failed were still marked as completed in the system.
According to him, nearly ₹3.8 lakh worth of transactions in a single month were shown as paid despite no actual inflow, prompting the team to review records spanning the past two years.
Operational stress and complaint planned
Hussain highlighted the operational burden caused by the discrepancy, including repeated manual verification, increased workload and stress for his team. He stated that the company is preparing to file a formal complaint and seek recovery of losses along with damages.
He also urged other founders to verify their accounting records and not rely entirely on automated systems without periodic checks.
Zoho responds, cites integration issue
Responding to the allegations, Zoho clarified that its preliminary findings indicate the issue may not stem from its core software. The company suggested that the discrepancy could be linked to a payment gateway integration.
Zoho stated that its support team is actively working with the startup and coordinating with the gateway provider to investigate the issue further.
Payment gateway assures resolution
Cashfree Payments, the payment gateway mentioned in the case, said the issue has been resolved and assured that there would be no further impact. The company added that it is collaborating with Zoho to identify the root cause and prevent recurrence.
Broader concerns for startups
The incident has sparked wider discussion within the startup ecosystem about the reliability of financial software tools and the importance of regular audits, especially for businesses handling high transaction volumes.
Statement from Zoho
“On the issue raised by FlexyPe on Zoho Books through social media and reported in the press: this issue was not from Zoho Books at all.
It was caused by incorrect payment status updates from a third-party tool that FlexyPe was using called Cashfree, which marked incomplete or dropped transactions as successful, leading to reconciliation discrepancies.
We at Zoho, have actually helped FlexyPe identify the issue and CashFree has acknowledged that the issue was on their side. The Cashfree team has publicly confirmed the issue. Link to their comment: https://zurl.co/0Gwgx
Unfortunately, while the investigation was still underway, FlexyPe prematurely took to social media and made a big attack on Zoho Books that was entirely false. Even after it became clear that the issue was not with Zoho, they have not retracted their falsehood. They continue to insinuate that somehow Zoho was partially at fault, which is again false.
As a result, we are compelled to pursue stringent legal action on FlexyPe for posting this malicious false claims.
False statements like these are not going to change the value we provide to our partners and customers. Thank you to all of you for standing with us and looking out for us!”