Building resilience during uncertain times

In January, I wrote a thought leadership piece which pointed out that we may be on the cusp of a new era of existence. This will be an era whereby the rules that govern business will fundamentally change and demand will be driven by consumers who will be more fixated on value than ever before.

Unfortunately, before any period of significant change, there is a period of significant challenges. We experienced this during the Covid Pandemic, and we are seeing these challenges become even more poignant as the cost-of-living crisis impacts demand and consumer spending.

In response to this, companies are looking towards improving their cash management programmes. What will this look like in the future?

Cost efficiency in CFOs’ sights

The article points out that the urgency to use technology to improve operations is mounting. Inflation seems poised to last well into 2023, and corporate belt-tightening has become the norm. In the current tough macro environment with many businesses preparing for a recession, CFOs have identified cost efficiency as a primary strategic objective for 2023.

Automated, item-level expense data can cut down on manual expense management efforts of back offices, he said, while also enabling custom, flexible controls that ensure policy-compliant spend.

The article adds that it is not just a perk for the CFO’s bottom line — audit departments stand to benefit significantly from item-level data access. For instance, supporting employee engagement through recognition spending is important, but it can be extremely challenging to understand whether line-item spending was for in-policy goods and services.

Most immediately, the granular insight offered up by item-level data can tell the CFO where the team is spending money today, he said, and by plugging in that data into expense management providers’ software (and platforms providing access to item-level receipt data courtesy of the Banyan network) the CFO can also identify where that money might be better spent.

Automating information flows & the audit process for misuse

Thew article notes that there’s money to be saved in simply automating the data flow itself. It costs roughly $58 in back-office manpower hours (as estimated by the Global Business Travel Association) each and every time an employee submits a hotel expense report. And, he said, 1 in 5 expense reports that are submitted have errors — which leads to additional inefficiencies, corrections, reimbursement delays and even a hit to margins (if the firm pays out more than is owed, so to speak).

Amid the great post-pandemic reopening, companies that stand most obviously to benefit from an item-level data network are the ones that are seeing an increased volume of travel. As the so-called road warriors are getting back on the road, hotels and rental cars are getting booked — and there are the all-important client meals.

The article points out that wielding corporate cards to pay for it all is simply par for the course. One might hope for integrity as those employees hit the road on behalf of their employers, but that’s not always the case. If you have a proper account monitoring system, there’s no ways or areas in which a person can misuse a corporate card. There is an audit trail to support the integrity that all companies, and all executives want to see. Flagging misuse also winds up having a positive ripple effect in making sure that employees are better aware of, and adhere to, corporate spending policies.

Turning data into change-the-business insights

With interest rates rising and a generally gloomy economic mood souring the macro environment, the notion of providing value has changed for CFOs.

The article points out that, as our globalized world becomes further integrated and intertwined, particularly from a business operational standpoint, CFOs attempting to predict future revenue streams or develop long-term working capital models are increasingly using data-rich strategies to drive business growth and capture efficiencies.

The data that exists within companies is at the heart of everything that drives better decision-making.  The need for companies to make data, data governance, and strategy a priority if they want to capture its full value. It’s imperative to harness that data and to be able to layer on the tech that’s available to drive better decision-making.

The article adds that, at the same time, finance chiefs from around the world point out that 2023 was shaping up to be the year when more so-called tech agnostics would consider changing their tune.

While many companies don’t yet have the resources or expertise necessary to glean critical expense and payment data and transform it into actionable insights, businesses clinging to legacy methods of managing B2B payments and expenses may find themselves at a crossroads, facing competitors leveraging new technology to solidify their advantage.

The article points out that a company executive notes that much of his time goes into getting [data] and then making decisions based on that to improve the company’s investment, its systems, [and] its processes. We’re looking across the board making sure everything is scalable, repeatable, [and] ultimately, that we can be there to provide more value to our customers, that’s a big part of why we started heavily investing in intelligent automation, said the executive.

Data provides certainty, and certainty is key for CFOs looking to stay profitable by making smart decisions. Leveraging organizational data is key to unlocking greater value from existing business models by increasing visibility and allowing greater control over spending and further accountability over common processes.

Moses Singo is a Partner at Genesis Corporate Solutions and is a Junior Business Rescue Practitioner.