The road to success is never easy, but 2020 has put businesses around the world to the test like never before. COVID-19 and its economic impacts weigh heavy as we look ahead to 2021. So, when it comes to sound financial decision-making, companies need all the help they can get.
When facing a disruptive event – whether the current pandemic or future economic downturns – a company’s ability to optimize cash flow will play a critical role in its survival and success. If business is booming and cash flow is strong, finance teams need the insight to direct that money toward R&D, mergers and acquisitions, and paying down debt. On the other hand, if times are tough, every dollar must be spent wisely – including cutting costs, identifying savings, and finding new revenue streams – in order to stay afloat. And all companies must contend with COVID-specific challenges, such as buying personal protective equipment for onsite employees and software, hardware, and other supplies for the employees who can work remotely. Whatever the case, to make those critical determinations, cover costs, and stay flexible and resilient, companies need tight control over their spend and accurate and immediate insight into their spend data.
To find out how successful companies are using expense and invoice management technology to store, access, and analyze company spend data, Aberdeen conducted a survey of 606 finance leaders at mostly midsize companies across 27 industries and six countries. The goal is to better understand how top-performing or “best-in-class” respondents are facing recent challenges, the business capabilities they have to address those challenges, and the technology that is making that response possible.
Of all respondents, 37% expect to still be in recovery mode as they plan for 2021, with 29% expecting to be in survival mode and 23% expecting revenue to increase.
When asked to rate their top financial management priorities, controlling costs was number one across the board, with improving data accuracy and tracking company spend coming in second. So, it is perhaps not surprising that best-in-class respondents reported having 74% of their company spend captured with digital expense and invoice management solutions (compared to 57% for other companies). They also reported being able to access the spend data they need right when they need it 80% of the time (compared to 61% for others). What is exceptional, is the difference in performance: Best-in-class respondents reported a more than 26.1% improvement in productivity and 24.3% improvement in profitability over the past two years – compared to -2.4% and -1.7% for other companies respectively.
It’s clear that having immediate access to accurate spend data gives finance leaders the insight they need to succeed over the long term. In addition to allowing companies to operate more efficiently by automating spend data capture and workflows and enabling remote access, digitalized expense and invoice management allow best-in-class companies to outperform others in leveraging company spend.
In fact, compared to all others, best-in-class companies are 31% more likely to use spend data to track and manage budgets. They are also more likely to using their spend data to:
- Manage cash flow
- Audit for budget compliance
- Enrich forecasting with historical spend data
- Categorize spend data based on new trends
- Redirect spending to top business priorities
While providing better access to spend data on their own, expense and invoice management solutions work best when integrated with each other. In addition to this, best-in-class companies are more likely than others to have integrated expense and invoice management tools with budgeting, payroll, and ERP and financial systems. Not only does this integration help achieve a more-complete picture of spend across an organization, it better equips finance teams to uncover cost-saving opportunities and redistribute funds to more-strategic initiatives.
So, what does all this spend insight deliver in terms of business outcomes?
Here, the results could not be clearer. Across the board, best-in-class companies that have invested in capabilities and technologies that optimize cash flow and deliver real-time spend insight are more likely to report improvements in:
- Budget visibility
- Workforce productivity
- Customer satisfaction
- Speed of decision-making
- Data sharing and collaboration
- Employee trust in data
- Simplified analytics
As we move into 2021, there are many things that remain uncertain. Businesses may need to continue tightening their belts or may experience a sudden upturn in demand. Whether you’ve started to digitally transform some of the ways you manage company spend or are starting from scratch, you should be fully optimizing cash flow, managing budgets, and ensuring spend compliance.
Read the full Aberdeen report to find out more about how best-in-class companies are using digital spend management to stay flexible and resilient. Then visit us at www.concur.ca to see how you can do the same.