The problem lies with a software issue in Zoho Books, which has caused a financial disagreement to arise. The CEO of a startup FlexyPe claims that some transactions were erroneously marked as completed when, in reality, they were not.
The issue surfaced when FlexyPe co-founder Azeem Hussain reviewed his company’s financial data for March and noticed mismatches between actual receipts and entries shown in the accounting software.
According to Hussain, transactions worth nearly Rs 3.8 lakh did not reach the company’s account despite being marked as completed payments within the system. The discrepancy, which went unnoticed initially, has raised concerns about how long such errors may have persisted.
In a strongly worded linkedin post, Hussain said his company had relied on Zoho Books for nearly two years for invoicing and reconciliation, only to discover that failed transactions were being marked as paid. “The money never came in, but the system showed it did, silently, in our books, for who knows how long,” he wrote, adding that a manual audit of just one month revealed discrepancies of ₹3.8 lakh. Calling the experience “frustrating and exhausting,” he said the team is now reviewing two years of financial data and plans to pursue legal action. He also urged other founders to independently verify their records instead of relying entirely on automated accounting systems.
For a startup, such inconsistencies go beyond a simple accounting error. Financial software is central to tracking revenue, managing cash flow and ensuring compliance. Any mismatch between recorded entries and actual bank inflows can disrupt operations and decision-making.
Hussain said the discovery forced him to revisit financial records from the past two years to identify similar discrepancies. The exercise, he noted, has added operational strain and increased pressure on the business.
He has indicated that he will seek compensation not only for the alleged financial loss but also for the mental stress caused by the issue. A formal complaint is expected, and legal action is being planned.
Zoho, however, has not attributed the issue to its software at this stage. The company said its initial analysis points to a possible problem at the payment gateway level and confirmed that it is working with the concerned service provider to examine the matter.
Zoho’s Statement: 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. The screenshot of their comment.
The payment gateway firm involved has also initiated a separate investigation.
The episode has sparked a wider discussion around the reliability of financial software systems used by businesses, particularly those that depend on multiple integrations for payments and accounting.
As the case develops further, the emphasis will probably move to financial statements and technical logs in order to establish at which point the error was made. Up until now, however, the case continues to be investigated, with no conclusions drawn.
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