Navigating Economic Decline with Spend Data and Analytics
As businesses try to rapidly adjust to change stemming from the COVID-19 pandemic, including a shift to more employees working from home and potentially a sharp economic decline in many sectors, finance teams need to get a handle on their spending.
Doing so, however, isn’t necessarily as simple as just cutting superfluous costs or freezing spending. In many cases, finance teams need to increase their visibility into their spending and analyze spend data in order to take the most effective action to help their companies navigate this difficult period.
This could even mean expanding investment, such as adding technology tools that facilitate remote work. If that happens, though, finance teams need to be able to incorporate this spend into their overall analysis so that they can reduce risks such as creating negative cash flow.
Tracking All Spend Data
To leverage spend analytics, finance teams need to track the full spectrum of corporate spend, so as not to leave gaps that throw off analysis. That could mean leveraging technology tools like e-procurement or spend management platforms and mandating that employees only make purchases through these tools so that the data gets collected.
If finance teams do not have technology in place to collect spend data, they at least need to implement processes that can facilitate more complete, efficient tracking.
For example, some finance teams may not have closely monitored every corporate credit card purchase in the past until employees filed expense reports or until the end of a reporting period, but these unusual times may call for more thorough oversight from finance teams. Similarly, finance teams may need to emphasize the importance to all employees to report the specifics of any spending, especially if employees are starting to purchase services on their own to facilitate working from home.
In addition, finance teams may need to increase collaboration among other departments such as procurement. It’s important for data to not get siloed in different areas of a business, particularly as companies move to a completely distributed workforce and may not have the same communication methods as they’ve had in the past.
Diving Into the Data
With increased collaboration, monitoring, reporting and ideally using a platform to get a full picture of spend data, finance teams can then more thoroughly analyze spending. Here too, they can ideally leverage software platforms that can automate and facilitate deeper analysis than employees might have the bandwidth for manually.
For example, using interactive dashboards that include different ways of visualizing data could help finance teams spot opportunities to reduce costs, particularly if there are areas that can be put on hold until business gets back to normal, such as equipment upgrades.
Analyzing spend data can also help finance teams prioritize their most important vendors and work with these suppliers to ensure relationships stay strong during these rapidly changing times, even if that means taking steps like putting orders on hold, adjusting delivery times, etc.
Being Prepared, Yet Flexible
Because of the current situation, a lot of work already done by finance teams such as budgets and revenue forecasts may no longer apply, and thus they need to quickly make changes. Yet because this healthcare crisis and associated economic impact is changing so rapidly, finance teams also need to be flexible enough to continually adjust these areas as needed.
Having a more complete view of spend data and an understanding of spending patterns can help make this work easier and overall make getting through this period easier.
To learn more about how your finance team can better leverage spend data and solve related procurement challenges, download our checklist — Overcome Procurement Challenges to Gain Significant Savings: A Checklist for Finance Teams