• Ian Johnson, SVP Market Development at Soldo


• 26.08.2022 08:15 am
spend management

As financial markets soared in 2021, we saw a record number of IPOs and workforces surge in numbers. The big six U.S. banks for example added almost 60,000 employees – or the equivalent of Morgan Stanley's worldwide workforce. But the recent news of hiring and spending slowdowns has been well chronicled. Record levels of inflation, rising interest rates and an economic slowdown have created a more challenging market for companies to navigate. Against this backdrop, investors have faced a reality check. Just this year, fintech valuations have dropped by almost half a trillion dollars – sending shockwaves through the fintech community and showing that funding isn’t as free-flowing as it has been.  

It has become clear that, despite a brief golden period of post-pandemic spending, the double blow of tightening budgets and rapidly rising costs from inflation means that businesses are now preparing for a recession.  

The shrinking economy has highlighted a stark truth - adaptability is no longer just a nice to have. The ability to effectively manage the ongoing change from an economy that is predicted to keep shrinking until the end of 2023, while ensuring they can remain competitive is now essential to business survival. To do this, finance teams need full visibility of spending across an organisation in real-time, and the ability to control spending for people and teams. In short, having a complete picture of spend will give teams the confidence and flexibility needed to adapt to any situation. 

Creating adaptability and agility to deal with the long-term impact of a recession   

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.  

So it may not come as a surprise to learn that, according to data taken from a Soldo survey of over 250 professionals across the technology market, two-thirds (64%) 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 simply can’t get the full picture of company performance.   

Opening the doors to growth  

So how do businesses turn this extraordinary business climate into a distinct growth opportunity? They use automation to their advantage. 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. 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, repeated entries, or gaps in the data that come from manual data entry.   

Expense management can be time-consuming and it’s these inconvenient, time-sapping and sometimes unclear processes that finance teams should immediately be turning to technology for answers. Instead of wasting days putting together company-wide expenditure and spend data, easy expense management processes will allow teams to spend their time taking action supported by accurate data.

How to revolutionise your spend management  

As the finance world pulls back on its spending plans and extends its hiring freezes, the uncertain global economic outlook has underlined the need for the use of data and digital technologies. Despite visibility and control of spend across the entire business never being more important, the data from Soldo shows 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. But the downside of tracking spending this way goes beyond the risk of human error and poor productivity: this outdated, time-consuming, impractical approach makes it difficult to get an accurate snapshot of your company’s spending. What's more, 43% of finance teams spend at least half a day a month processing expenses. That’s a lot of time and effort that could be saved and put to better use. But with the right spend management software, you can make light work of these tasks, giving you complete control and visibility and more time to grow your business.  

Automation is transforming the future of finance  

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. A famous example of technology working alongside humans is in Amazon’s warehouses, where its robot tech finds and brings good to human packers. This is a great example of using technology to free teams from repetitive and tedious tasks and allow them to focus on spending more time contributing to the business's bottom line. 

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 when there’s no chance of manual data entry errors. This means 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, they’ll become known for thought leadership and long-term business strategy. No longer seen as simple accountants or reporters of retrospective results, CFOs will take on more influential, generalist roles. A great example of this is Marie Myers – HP’s CFO who has also taken on the role of Chief Transformation Officer – who has used automation and data to both transform her role as well as that of the business. 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.