Staying Resilient in an Economic Storm: How AP Automation can Fortify Your Finance Office
The Great Resignation, rising interest rates, clogged supply chains, high inflation, and geo-political unrest have all made it difficult for business owners to focus on long-term growth. Add to the list the likelihood of a recession, and it’s easy to feel overwhelmed and uncertain about the future.
Assessing the state of your Accounts Payable (AP) department and ensuring that your organization is financially prepared to handle the unexpected is a great starting point when preparing your business for economic uncertainty. Without a solid foundation, navigating through an economic downturn can be tricky, primarily if you still rely on manual AP processing. Traditional processes are costly, riddled with efficiencies, and lack visibility, making it difficult to achieve any success during financial downturns.
How can you prepare your business for a recession?
The National Bureau of Economic Research (NBER) Business Cycle Dating Committee—the official recession scorekeeper—defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months1.” While the U.S. has not officially entered a recession, major economic data hints that one is likely possible. According to the Bureau of Economic Analysis (BEA), the U.S. GDP fell in the first and second quarters of 2022, which has historically been seen as a strong indicator of a recession2.
Preparing for a decline in economic activity is tricky, and most CFOs will shift their priorities during a recession to improving efficiency, cost controls, and business agility. Implementing Cloud-based AP Automation can help you achieve these objectives and recession-proof your AP department in return.
AP Automation also allows you to regain momentum in your business office even when resources are low. The Great Resignation continues to be a problem, and once department heads evaluate the state of their business office, some may confirm what they fear to be true– it isn’t easy to find and retain top talent. Close to 4.2 million workers had quit their jobs as of August 20223 because of pandemic burnout, low pay, no opportunity for advancement, etc. The phenomenon further complicates talent acquisition that businesses need to succeed. At this point in time, talent acquisition and retention are the second-highest risk in the eyes of executives4. Automating the invoice-to-pay process increases agility and eliminates tedious manual tasks so that employees may focus more on strategic initiatives and mission-critical tasks.
AP Automation also provides enhanced visibility into cash flow. Effectively managing cash flow is the number one thing your AP department can do to stay afloat during challenging times5. The cost of inefficiencies that come with a manual invoice-to-pay lifecycle include poor visibility, high costs, past-due payments, difficulty scaling, and overworked staff. All are challenging for departments and burn through cash on hand. AP automation is the quickest way to gain visibility and reduce costs for your organization.
Along with increased visibility into cash flow and providing on-demand reports of your financial status, automation helps fight the impacts of a recession in these four areas, according to IT Brief6:
- Reduce the cost of employee attraction and retention
- Eliminating manual job duties enables employees to focus on high-value tasks and advance their careers. With retention improved, recruitment and training costs are also lowered. Even better, you can scale operations quickly, even during economic uncertainty.
- Slash the costs (and ill feelings) incurred by bad data
- Currently, $1.5 trillion is being held hostage globally on balance sheets because of inefficient financial processes7. Invoice Automation provides an 80% reduction in errors with coding and invoice exceptions, meaning costly human mistakes are no longer a risk and incurring expense to your organization.
- Do more with less
- When users implement Invoice and Payment Automation, best-in-class providers become an extension of their AP team. Instead of replacing your staff, these solutions empower team members to tackle tasks with time saved from eliminating manual workflows. More than 40% of the typical end-to-end AP process is manual or paper-based8. When you automate, staff are no longer tied to keying invoice data, chasing down invoice approvals, fixing errors, or responding to calls and emails about the status of payments. These duties are grueling and time-consuming, often causing employees to feel overworked and burnt out.
- Speed up workflows that normally slow your business down
- Simplifying AP workflows allows you to streamline your business. A best-in-class AP Automation solution makes it easy to simplify workflows as it creates electronic approval routing, paperless document management, and role-based controls.
Though recessions are most certainly daunting, AP Automation can provide a silver lining. It can help you navigate a slowing economy by cutting overhead costs, increasing efficiency, and keeping a critical eye on cash flow. World-class automation providers understand that finance departments are tasked with continually doing more with less, especially during seasons of economic downturn. Getting started with Paymerang often takes 10 hours or less from start to finish and can seamlessly integrate with a range of ERPs.
As the economy fluctuates, relying on manual AP processing can be risky for business leaders. Costly and inefficient processes prevent organizations from effectively planning for a recession. Recession-proofing your business with AP automation ensures you can fill empty positions and achieve goals, no matter the economy’s state.
To learn more about Paymerang’s Invoice and Payment Automation platform, schedule a demo today.
1National Bureau of Economic Research (NBER) Business Cycle Dating Committee
2Bureau of Economic Analysis (BEA), 2022
3Job Openings and Labor Turnover Survey (JOLTS) released by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS)
4PriceWaterhouseCoopers, Pulse Survey, 2022
5Business: 8 Ways to Keep Your Small Business Afloat in Any Financial Climate
6ITBrief: 5 practical ways to fight recession with automation
7PriceWaterhouseCoopers, Working Capital Report 2021/22