The tech industry is now bracing for an economic recession and the world’s biggest tech firms have offered hints that they are hunkering down.
News of layoffs and hiring slowdowns have unfortunately become commonplace as the industry faces the worst cost-of-living crisis in 60 years. Recently, we saw Snap planning to lay off a fifth of its 6,500 strong workforce, and Big Tech companies from Meta to Alphabet to Microsoft imposing hiring freezes.
It has become clear that, despite a brief golden period of post-pandemic spending, supply chain shortages, growing inflation and energy prices are all encouraging industry leaders to prioritise saving over spending if they are to deal with the aftermath.
As the industry continues to consider just what the future will look like, it is little wonder most are looking for ways to protect themselves. As a recession looms, finance teams need full visibility of spending across an organisation in real-time, and the ability to control spending for people and teams. In other words, they need spend management tools if they are to squeeze every drop of value from company spending and remain competitive in a broad range of scenarios and outcomes.
The need for greater spend visibility
Yet while this seems straightforward, many finance teams have been held back by processes that have been built on top of earlier processes. Where data entry has been a laborious, manual affair between siloed systems, creating a finance system that is neither agile nor automated – hampering a team’s ability to have a complete picture of what company spending looks like across the business.
It may not come as a surprise to learn that, according to Soldo data, two-thirds (64%) of finance teams in technology companies do not use a spend management platform, while a third (36%) state they make purchases on behalf of their company every week. Without the full visibility of spending going on within the business, finance teams are at a disadvantage. A lack of understanding about what’s coming, and importantly, what’s going out, hampers the company’s ability to be more productive and find opportunities for agile decision making
Manual processes are outdated in tech
For businesses to survive, let alone see growth in this current climate, it’s key they turn to automation and modernise their finance department – revolutionising the way they work. Take expenses as an example of an often-invisible drain on a company’s finances. In the same research from Soldo, it was revealed that a third (32%) of respondents rely on reimbursements and a quarter (26%) rely on petty cash.
The data also showed in businesses with more than 1000 people, over a third said their department spend is between £1,000 – £10,000 per month. Without some form of automation in place, tracking this large amount of spend involves a lot of manual input and paperwork, including spreadsheets, paper receipts, reams of bank statements, and reimbursement forms. These manual methods of tracking and auditing a constant stream of significant payments will make it harder to control, track and report on company spend, and will increase the risk of mistakes or gaps in the data that come from manual data entry.
Time is money, spend it on what matters
Spend management can be time-consuming. Almost a quarter (24%) of finance teams spend a full day each month just processing expenses or tracking spending. Instead of wasting days putting together company-wide expenditure and spend data, easy spend management platforms will allow teams to spend their time taking action supported by accurate data.
That’s a lot of time and effort that could be saved and put to better use – for example, strategic thinking to help the business save in the current climate.
Automation: finance teams’ ally, not enemy
Better use of time often means understanding where repetitive, menial tasks are being performed and looking at ways of making them more efficient, hence the role of automation. But for automation to become widely accepted, some narratives need to be addressed. For example, there is a belief that job roles may be replaced with automated software, whereas in reality, the exact opposite is true.
Finance teams should aim to work with automation rather than compete against it. When businesses get the right mix of human and automated work, processes are more efficient, and individuals are freed up to focus on more useful tasks like data analysis or forecasting. The data they are using also becomes more accurate and more reliable – meaning more precise predictions. And because the data is richer, decision-making is better too.
Thanks to the deep insights, high-quality data, and informed forecasting that technology unlocks, finance teams can be strategic advisors to businesses. A great example of this is Marie Myers – HP’s CFO who has also taken on the role of Chief Transformation Officer – who adopted automation to transform many business functions. As Marie points out, “data analytics is increasingly important to provide insights that help us be more strategic partners to the business and to help HP make data-driven strategic decisions.” It’s a great example of what many CFOs and finance leaders are looking for – being better prepared to guide their business into the future, rather than being fearful of what it presents.
Whether it’s the cost-of-living crisis, a recession or an unforeseen hurdle not yet on the horizon, finance teams must ensure they are devising and implementing strategies that provide the adaptability needed to overcome any challenge. With the adoption of technology, businesses can modernise and automate the spend management experience to increase visibility and control over spend. This way, finance teams have more time and power, and can play a strategic role – guiding the business to success, whatever the scenario.
About the Author
Ian Johnson is SVP Market Development at Soldo. Tracking and controlling spend was once a dark art, needing workarounds for payments and stifling staff withadmin. Soldo combines prepaid company cards with a management platform – the brighter way to managespending.
Featured image: ©Kwarkot