Generation Start-up: how FinFlx aims to help protect UAE gratuity payments

The coronavirus pandemic caused difficulty and disruption on many levels across the world. For Egyptian Amr Yussif, and French national Matthieu Capelle, there was a moment of inspiration during the period of adversity.

Jobs were being cut across many industries worldwide, as companies sought to stay afloat and survive the slowdown.

Mr Yussif was working for a brokerage house in Dubai when it was acquired by a group in the UK. The new management decided to move their Middle East operations back to London.

"They took the client book and wanted me to move with them to London — part of my study was in the UK and my wife is British, so they thought it would be an easy move for me. But this is my 15th year here and my wife has been here 10 years, so we are stable here and said 'no it doesn’t work for us'," he says.

"They didn’t account for this and thought it would be a nice surprise at the end with a promotion and everything. It wasn't an amicable divorce."

Difficult as it was, Mr Yussif's experience of separation from his employer turned out to be the reason he started FinFlx, an end-to-end gratuity management solution for small and medium enterprises.

End-of-service gratuities are lump-sum payments that all employed residents are entitled to after completing at least one year of service. Gratuity payments are covered by UAE labour laws and the sum depends on an employee’s length of service and basic salary.

FinFlx provides a platform to manage employee records, forecast gratuity liability and then helps SMEs to create a segregated and managed gratuity fund to offset their existing liabilities.

It offers multiple savings schemes for varying risk profiles, including a capital protection scheme where the principal amount is guaranteed.

The start-up has so far raised $1.5 million in pre-seed funding from prominent investors such as YCombinator, Dubai Future District Fund, 500 Global and Vectr FinTech as well as strategic angel investors.

Mr Yussif, who graduated in Egypt as a veterinarian before switching fields to finance, was earning a "significant" salary when he sought to part ways with his employer and was subsequently owed a lot of money as end-of-service gratuity.

However, his gratuity was withheld and there was nothing he could do "as I was the authorised signatory and had no one to complain to", he says.

He went to Tawafuq, the Ministry of Human Resource service centre, to make a complaint.

"It was 7.30am and I was already number 37 in the queue. The guy reviewing my case said he was dealing with perhaps 150 people a day," Mr Yussif says.

"I started playing the numbers and digging deeper and it was a huge [market opportunity], and I ended up getting into gratuity by complete coincidence because this situation happened to me.

"I wanted to make a quality financial services product available to everyone, at scale and using technology, using a business-to-business approach to it."

FinFlx is licensed by the Abu Dhabi Global Market and works on proprietary technology built by Mr Capelle — who also serves as its chief technology officer — and his team.

Mr Capelle is a software engineering veteran and previously served as head of engineering at Careem Pay and chief architect at Murex, a financial software provider.

The company, which has been in private beta mode with about 15 clients for six months, is now ready to launch. It has more than 120 SMEs on the waiting list, Mr Yussif says.

While starting a company during the pandemic proved challenging on many levels, Mr Yussif found that it helped him in terms of user research.

About 87 per cent of SMEs in the GCC region don’t have any measures in place to fund their gratuity liabilities, and the amount is financed as and when required out of their cash flow, a recent report by Willis Tower Watson, found.

Even the SMEs that do keep funds aside to cover gratuity liability only allocate financing for 20 or 30 per cent of the total amount required, it said.

Meanwhile, the UAE also introduced new regulations regarding gratuity payments as part of amendments to its labour law earlier this year.

Gratuity payments can now be paid in either UAE dirhams, or an employee’s chosen currency, as agreed upon in the employment contract.

All end-of-service entitlements must be paid within 14 days to avoid a penalty, while employment contracts must now be limited for a term of up to three years.

In Dubai, a new savings pension plan for non-Emirati employees working in the public sector also came into effect on July 1.

The employer will contribute the total end-of-service gratuity to the plan from the date of joining, without including the financial dues for previous years of service, the steering committee overseeing the pension system said.

The percentage of the contribution to the scheme will equal the end-of-service benefits due to the employee, in line with human resources legislation.

The rate of return will depend on the amount invested by employees, how it is distributed across available investment portfolios and the risks associated with it, the committee said.

Employees can also choose to make their own contributions to the scheme and will have the right to withdraw their personal savings at any time.

The scheme also has the scope to expand into the private sector at a later stage, officials said.

The DIFC was the first entity in the UAE to set up a gratuity system when it introduced the DIFC Employee Workplace Savings (Dews) plan in February 2020, offering end-of-service benefits to people working within the financial centre.

With the increased focus on end-of-service benefits, Mr Yussif foresees "good growth" for FinFlx.

"We should have a flood of companies seeking compliance," he said.

"We're here to make it easier for companies who don't have sophisticated finance departments."

Currently, the start-up has 12 employees, with the core founding team based in the UAE and the engineering team mainly located overseas.

The start-up, which will receive incentives from Abu Dhabi technology ecosystem Hub71, plans to double the number of its employees by the end of the year, with a focus on boosting its presence in the UAE, Mr Yussif says.

Q&A with Amr Yussif, co-founder and chief executive of FinFlx

What already successful start-up do you wish you had started?

I’ve always had an eye on expense management start-ups. Another idea I wanted to do was digital cheque signature. So instead of issuing a cheque, I wanted to digitalise the paying of rent cheques, trusted by both banks, with a blockchain-based smart contract. I hope somebody does it one day, but I think it’s coming.

What is your next big dream that you plan to make a reality?

I have a four-year-old son and wanted him to go into Grade 1 or 2and when he’s asked what his father does I want him to stand proud and say "my dad has a business that makes sure all the other parents have enough money for school, a house and everything". My father passed away last year and I want to make him proud too. Where I come from, you work mainly to make someone else proud.

I want for people to one day say "I’m ex-FinFlx, I worked for the company". It doesn’t have to be a unicorn, but a company that inspires people and gives back to the system.

What new skills have you learnt in the process of setting up your start-up?

I built our first website. It wasn’t the best but I’m proud of that. The easy part was the financial modelling because that’s what I do every day, but doing social media, creating a website and email campaigns, setting up all the things you wouldn’t usually do at a higher level, I’ve learnt to do [all that]. I started educating myself about different tech stacks and now I can talk to engineers in their language.

If you could start all over again, what would you do differently?

I would go faster to customers. I was my own enemy and wanted everything to be perfect before I started on-boarding people to the platform. I would have spent more time fixing things that customers were complaining about than trying to perfect the product before it goes out.

Who is your role model?

I’m not a big fan of idolising an individual but I look at different traits in people. I like Jeff Bezos for how he strategises things in a simple way. I like Elon Musk in that he dares to change. If there is one thing that I appreciate since I started entrepreneurship, it’s that you evolve as a person, and I am still learning and evolving as a person.