In an official statement on Tuesday, Zoho addressed the dispute raised by FlexyPe and attributed the issue to a third-party payment gateway integration rather than its own accounting software.
“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,” Zoho said.
The company added that it had worked with the startup to identify the root cause and said the gateway provider had acknowledged the issue. “We at Zoho, have actually helped FlexyPe identify the issue and Cashfree has acknowledged that the issue was on their side,” the statement read.
Zoho also criticised FlexyPe for going public before the investigation was complete.
“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,” it said, adding, “Even after it became clear that the issue was not with Zoho, they have not retracted their falsehood.”
The company further stated, “We are compelled to pursue stringent legal action against FlexyPe for posting these malicious false claims.”
FlexyPe flags Rs 3.8 lakh mismatch
The issue first came to light after Azeem Hussain, co-founder of FlexyPe, highlighted discrepancies during a manual audit of March accounts. The company found that Rs 3.8 lakh had been marked as paid despite the funds not being received.
“The money never came in. But Zoho said it did. Silently. In our books. For god knows how long,” Hussain wrote.
FlexyPe, which processes transactions worth crores daily, said it had initially trusted the system. “Why would you doubt your invoicing tool on something this basic?” he added.
Audit underway, legal action planned
Following the discovery, the startup has begun auditing its books over the past two years to check for further discrepancies.
“We’re filing a formal complaint. And I’m going after every single rupee – plus the damages for the mental pressure and unnecessary workload this has caused,” Hussain said.
Customer Support from Zoho Cares
Zoho’s customer support arm, Zoho Cares, reassured users that the issue was being prioritized. “Our team is analysing this issue as a top priority. Our preliminary analysis clearly points to an issue with the payment gateway integration rather than an issue with Zoho Billing/Zoho Books’ functionality,” Zoho Cares wrote. The company also confirmed they are working closely with both FlexyPe and Cashfree to resolve the issue.
Cashfree Payments Confirms Investigation
Cashfree Payments, the payment gateway provider involved, confirmed they are investigating the issue. “We have received the request and our team is currently looking into it,” Cashfree said.
