How Automation is Helping Business Efficiency in Challenging Market Conditions
From supply issues to soaring utilities costs, the COVID recovery effort is bringing a new set of financial pressures to businesses all over the world. For those businesses based in the UK, general political uncertainty which includes Brexit, a leadership race and the ongoing war in Ukraine, on top of a looming recession, is all adding smoke to an already clouded horizon that businesses attempt to plan for.
Uncertainty is already taking its toll and 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 headcounts, or pausing on new hires, whilst FinTechs are delaying IPO plans to focus on profitability.
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 that enable 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 form in 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 – whether that be through 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 structure of a business that goes in search of short-term success, taking stock and looking for ways to maximise 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 will need to ensure the business is lean, operations are streamlined and are agile enough to withstand change. According to Tipalti research, over two-thirds (68%) of accounts payable teams still manually key invoices into their ERP or Accounting software, while 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 to just keep the business running. The same research shows 32% of finance professionals already believe that increased disgruntlement, churn or even burnout is likely if current AP challenges continue or worsen.
Considering one-fifth (20%) of UK CFOs say they have seen a greater demand placed on them by the CEO to strategically impact the business, it’s impossible for finance leaders to address efficiency issues across the entire operation when their own team is one of the main culprits.
The first step has to be stopping their own team from potentially burning out, and instead, that same team is arming them with 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 can not 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.