Finance Teams Need Spend Visibility Now More Than Ever
With unemployment soaring and the economy facing a great deal of uncertainty due to the COVID-19 pandemic, many finance teams are struggling to navigate this difficult period. Revenue might have already fallen for your company or projections might look bleaker over the rest of this year, meaning finance teams are scrambling to cut costs where possible.
Plus, to get through this period of uncertainty, many finance teams are trying to increase their cash holdings, mitigate risks and adhere to compliance as they deal with a remote workforce. That means that finance teams urgently need to gain full visibility into their spend so they can understand their costs and find ways to better position their spending as they deal with this unprecedented situation.
Finding Cost-Cutting Opportunities
Cutting payroll may be one way to quickly reduce expenses, but that can affect the company’s ability to operate successfully, especially once the crisis subsides, as companies might not want to be in a shorthanded position. Plus, government assistance from the Coronavirus Aid, Relief, and Economic Security (CARES) Act could help businesses cover their payroll costs, so there may be other costs that make more sense to cut.
Having full visibility into spend and clear communication with other employees regarding expenses can make it easier to identify these cost-cutting opportunities.
For example, travel can be a significant expense, and some companies may already be saving based on canceled trips due to the pandemic. Yet it’s important to have detailed, up-to-date data on travel costs so that companies know what expenses they’re still liable for, what travel credits employees may have received and what refunds have been processed so finance teams can get a better understanding of cash flow.
Gaining detailed clarity into travel expenses can also help reduce future costs, such as by identifying trips planned for later this year or next year that can be shortened or canceled. Finance teams should also communicate with other employees to understand their experience with remote meetings to see if that’s something they would be comfortable doing in the future. Then, making a small investment in video conferencing tools, including high-quality cameras and microphones if needed, can still lead to lower costs overall.
Finance teams can also cut costs without necessarily harming operations by gaining visibility into spend on office products and services that can be reduced or eliminated over the next several months as employees work from home. Even if orders can’t be entirely canceled, some suppliers may be willing to work with you to shift purchases to later in the year and extend longer payment terms to at least free up cash temporarily.
Some suppliers may also be shift contracts, such as if an IT vendor can take spend that would have gone toward computer hardware and instead put that spend toward software that facilitates remote work. Doing so can help you avoid additional costs that could occur if you were stuck with a contract for hardware you don’t necessarily need right now but you then have to also purchase additional software to enable remote work.
Improving Risk Management and Compliance
In addition to cutting costs, spend visibility can also help finance teams improve risk management and compliance. As employees work from home, it’s important to not let rogue purchasing create new risks, so having real-time visibility into purchase requests can help ward off non-compliant spend.
For example, having employees make purchases through an e-procurement platform that finance teams can access remotely can help ensure that companies do not start making mistakes such as purchasing from unapproved suppliers.
Being able to track spend can also help companies in areas such as staying compliant with any loans they receive as a result of the CARES Act or through other channels during this difficult time. These loans may have strict rules around what the money can be spent on, so finance teams need visibility and a clear audit trail to ensure they stay compliant and, in the case of some CARES Act loans, potentially receive loan forgiveness.
Using Technology to Increase Spend Visibility
Given the importance of spend visibility to help finance teams get through this period, making a small investment in e-procurement/spend management technology can go a long way toward reducing costs overall, both now and when business gets back to normal.
Finance teams may already have a variety of accounting tools, but it’s important to be able to have real-time insights and control for all types of spend to help make quicker decisions and avoid unnecessary purchases before it’s too late.
Want to learn more about how e-procurement/spend management technology can help your company reduce costs as well as improve risk management and compliance in this new remote environment? Request a free consultation with our product experts today.