From supply issues to soaring utilities costs, the Covid recovery effort is bringing new financial pressures to businesses worldwide. For those businesses based in the UK, there is general political uncertainty, including Brexit, political instability and the ongoing war in Ukraine. On top of this is a looming recession which is adding smoke to an already clouded horizon that businesses attempt to plan for.
Uncertainty is already taking its toll. It has forced many to scale back as they look for where they can cut costs to save on the bottom line. Even big tech giants such as Google, Microsoft and Facebook are cutting headcount or pausing on new hires. Many scale-ups are delaying IPO plans until the market conditions improve, resulting in a shift from grow at all costs to sustainable growth with greater efficiency.
Whilst growth should always remain part of the long-term strategy for any ambitious business; patience has never been more important. A pivot to focus on efficiency strategies, of which automation should play its part, that enables sustainable growth will be crucial to withstanding this period of financial uncertainty. Needless to say, finance leaders have an integral role in setting a business strategy that aligns to realistic targets for the rest of the year and beyond.
The challenge of the current market conditions
Businesses are dealing with the hardest fundraising climate in more than a decade, while delayed IPOs are scuppering financial planning. For example, fintech Klarna saw its valuation drop dramatically last month from pandemic heights of $46bn to just $7bn. As a result, businesses are still working out what short-term success will look like over the next few years. For Klarna, this takes the form of a shift away from growth and towards short-term profitability.
As businesses contend with these new challenges, financial consolidation throughout the business will be taking place. They will consider redundancies, hiring pauses, delayed expansion or IPOs. Ultimately, businesses will have to revert to more firefighting strategies with these new market conditions.
Whilst many businesses are experiencing the impact of the current business climate right now, these conditions won’t last forever. Instead of making wholesale changes to the organisational structure to target short-term success, consider alternatives. Taking stock and looking for ways to maximise the efficiency of the team you already have will prove its worth in the long run. After all, these uncertain times won’t last forever. It’s important to make changes that enhance agility and provide a platform for the business to thrive in all conditions.
Identifying where to make efficiency gains
Finance teams must ensure the business is lean, operations are streamlined and agile enough to withstand change. According to Tipalti’s research, over two-thirds (68%) of accounts payable teams still manually key invoices into their ERP or Accounting software. Furthermore, 56% spend over ten hours a week processing invoices and supplier payments. These inefficient and time-consuming tasks are simply not fit to withstand change.
Moreover, with a potentially reduced headcount, finance teams will quickly drown in the volume of manual processing needed just to keep the business running. The same research shows that 32% of finance professionals already believe that increased disgruntlement, churn, or even burnout is likely if current AP challenges continue or worsen.
Furthermore, one-fifth (20%) of UK CFOs say they have seen a greater demand placed on them by the CEO to impact the business strategically. It’s impossible for finance leaders to address efficiency issues across the entire operation when their team is one of the main culprits.
The first step must be stopping their team from potentially burning out. Instead, that same team must arm them with the data-driven insights needed for better decision-making.
The value of automation
As outgoing costs continue to rise, the value of having complete visibility and control of all the business operations cannot be understated. Four in five finance leaders believe finance can only become a strategic driver of growth in the business when AP inefficiencies are minimised. However, as little as 9% of finance teams are fully automated, leaving efficiency low and manual processing high. The impact of manual operations has become too big for businesses to ignore.
By shifting the mindset from short-term growth to maximising efficiency, businesses can use this time of economic uncertainty to become more productive, increase visibility and control, and ultimately, be fit to scale and grow in the future. Automation will eventually transform every business’ operations. However, those early adopters will help ease the pressure their teams are currently going through and face the challenges that lie ahead.
Tipalti comes from the Hebrew expression for “We handled it.” Tipalti is the only company handling both Accounts Payable and Global Partner Payments workflows for high-velocity companies across the entire financial operations cycle: onboarding and managing global suppliers, instituting procurement controls, streamlining invoice processing and approvals, executing payments around the world and reconciling payables data across a multi-subsidiary finance organisation.
Tipalti enables high-growth companies to scale quickly by making payables strategic with operational, compliance, and financial controls. Companies can efficiently and securely pay thousands of partners and vendors in 196 countries within minutes. Thousands of companies, such as Amazon Twitch, National Geographic, Business Insider, Hopin, Cazoo and Time Out use Tipalti to reduce operational workload by 80 percent and accelerate the financial close by 25 percent, while strengthening financial controls and spend visibility.
For more information, visit tipalti.com.
