The COVID-19 pandemic is redefining how the world does business.
While small and midsize businesses (SMBs) around the globe have been shaken, many are surviving and even thriving. The question is, what sets those companies apart from the rest?
To find out how the right spend management tools are helping businesses stay resilient, Aberdeen surveyed 600 finance, IT, and procurement leaders at SMBs across 20 industries and 6 countries. The report explores the challenges businesses with fewer than 1,000 employees face, what they’re doing to address them, and which capabilities and technologies are yielding the best results. In particular, the report examines how “best-in-class” companies are maintaining control over cash flow and driving overall efficiency, productivity, and performance in the face of unprecedented economic uncertainty.
Since the start of the pandemic, 67% of global companies have seen a significant drop in revenue. In addition to this, remote work has become critical in keeping employees and their families safe. Yet, when it comes to managing overall spend, many businesses are only partially digitalized or are still entirely dependent on paper, e-mail, and spreadsheets.
Manual expense management makes it difficult for employees, managers, and finance teams working from home to create, review, and approve expense reports in a timely manner. This means higher expense processing costs and slower reimbursement times. Even when companies have partially automated expense management, a lack of spend analytics can leave blind spots in overall visibility and control. Finance teams and budget managers need to be able to run reports and review data from home so they can understand how expense categories are shifting, budgets are changing, where cash is being spent, and how to plan for future spending. And, while COVID-19 may have stopped many things, it has not stopped the need for careful auditing to identify waste and prevent fraud.
Today’s procurement, finance, and invoice management teams also need remote capabilities for invoice capture, processing, approval, and payment in order to effectively do their jobs. Not only does automating these processes inevitably lead to fewer errors, such as inaccurate entries and duplicate invoices, it also increases visibility into vendor-managed inventory and allows companies to better manage large, temporary changes in invoice volume.
In its study, Aberdeen defines a “best-in-class” company as scoring in the top 20% of survey respondents across several key performance metrics. And, perhaps not surprisingly, the results show that these best-in-class companies are more likely than others to have already digitalized and automated their expense and vendor invoice management.
Across the board, survey respondents were most likely to have adopted a digital expense management solution – automating everything from receipt capture to report creation, review, and approval. Those who had not, however, needed an average of 11.7 days to approve an expense report – compared to 6.8 days for best-in-class companies. The cost-benefit of digital expense management is clear, with best-in-class companies spending US$25.27 to process a single expense report, compared to $36.98 for others that were still doing it manually. That’s a cost difference of nearly 32%.
Best-in-class survey respondents were also more likely to have:
- Automated vendor invoice management, including automated invoice capture, approval, and payment
- Mobile apps for capturing paper expense receipts right at the point of sale
- Mobile apps for approving expense reports and vendor invoices
- Automated mileage tracking to automatically record driving distance
- Integration of expense and vendor invoice management solutions
- Integration between spend management applications and other back-end ERP systems
- Real- or near-real-time spend data reporting and analytics
So, what does all this mean in terms of business results?
Over the past two years, best-in-class companies have seen a 17.1% improvement in cash-to-cash cycle and a 20.6% improvement in productivity.
Thanks in part to their investment in digital expense and invoice management, these best-in-class survey respondents also reported 9% faster business processes, 10% faster decision-making, 13% more-accurate financial reporting, 9% better operating margins, and 10% higher profitability. They also reported 11% higher employee satisfaction.
Whether you’re navigating toward recovery or future growth, fully integrated digital spend management can help you increase productivity, bolster remote operations, optimize cash flow, and increase spend visibility and control.