Businesses’ cash-flow management practices have radically and in some ways permanently changed during the pandemic. Widespread cash flow shortages have made efficient cash flow management more critical than ever, and the shift to a reliance on a remote or hybrid workforce is looking permanent for many firms, rendering the expense systems they had in place unusable.
Many organizations are ill-equipped to handle these changes, at least in the short run. A third of businesses still use legacy methods to process their expenses, such as paper, spreadsheets or rudimentary, in-house digital systems. Such subpar solutions often cause longer-than-necessary processing times, and the general lack of transparency they offer can make it almost impossible for payments decision-makers to gauge their financial standing at any given time.
A large share of businesses are working to meet these challenges, however, and they are investing in a wide array of digital technologies to future-proof their spend management operations. In fact, 48% of businesses are already in the process of automating their accounts payable (AP) processes to some degree, as reported in the “Corporate Spend Playbook,” a PYMNTS and Airbase collaboration.
Get the report: Corporate Spend Playbook
Struggling with Fragmented Spend Management Systems
This innovation-forward business environment presents a massive opportunity for companies to implement spend-management solutions that can not only prepare them for a post-pandemic world, but also alleviate the silo-related problems that have plagued them for decades.
Businesses have long struggled with a fundamental lack of unity in their spend-management systems. Most use a mix of manual and digital solutions, which can make it difficult to track cash flow and make informed decisions. Even companies that mostly use digital methods tend to tap various systems in different areas of their accounts-payable processes, resulting in further fragmentation.
As a result of having any number of far-flung systems operating independently of one another — running the gamut from corporate card systems to payments to expense reimbursement — “finance and accounting teams are really struggling with the process of determining exactly how much money is coming in or out of the firm,” Airbase founder and CEO Thejo Kote told PYMNTS.
Read more: Better Data Access Delivers Profit, Spending Controls for Small Business
Optimizing corporate spending can be particularly challenging to businesses with 1,000 or fewer employees, which often operate on tighter budgets and have less room for error than their larger counterparts. Many larger enterprises have long had access to spend-management solutions that automate and optimize their corporate spend operations, but the high costs and infrastructural demands of such solutions often render them inaccessible to businesses that need them most.
Adopting Integrated, Digital Solutions
Platform-based, single-interface solutions can simplify and ease payments decision-makers' day-to-day workflows.
Two of the most common inhibitors to such AP innovation prior to March 2020 were that AP professionals had other priorities and that they considered their systems manageable, for all their flaws. Others included the beliefs that innovations were too expensive or that they often required additional changes.
However, now that innovation is a necessity, a new sink-or-swim attitude toward AP innovation is fueling a surge of interest in a wide range of AP and spend-management tools. The global subscription-as-a-service (SaaS) spend-management solution industry is on course to double in revenue by 2027.
Determining which solution would work best for an organization depends on the financial professional or the company, but any solution chosen should be integrated, digital and usable across various departments and payment processes. Adopting such solutions could help organizations put an end to spend management silos once and for all.
