2023 is already proving to be the year of greater cost control, with businesses scrutinising their budgets more than ever amidst the economic downturn. Moreover, with the government further increasing corporation tax from 19-25% in the government's latest Spring Budget, this year marks one of the most significant tax rises in modern British economic history, further adding to the financial pressures on businesses.
Organisations will no doubt be considering ways to prepare for future economic challenges. However, as costs pile up, the pressures will be heavily placed upon the CFOs' shoulders to provide financial stability. As a result, CFOs will be exploring how to manage their spending during a recession and looking beyond just cutting budgets or reducing expenses.
The most strategic leaders are already considering the economic downturn from a different perspective. According to Deloitte's Q1 2023 report, almost 3 in 10 CFOs see the recession as an opportunity to implement or accelerate structural changes within their organisations. One way to achieve this is by setting up internal controls to oversee spending approval, enhancing transparency across all company expenses, and automating time-consuming admin tasks that are a drain on valuable finance team resources.
Streamlining processes through hyper-automation and AI
Our everyday lives are full of monotonous tasks, and the financial sector is no different - inputting invoices and logging payment transactions are tedious and labour-intensive, making them ideal for automation. Hyper-automation, powered by Artificial Intelligence (AI) and Robotic Process Automation (RPA), is revolutionising the finance function. By automating and streamlining high-volume, repetitive, and manual business processes, AI and RPA enhance efficiency and prevent costly errors.
It can also offer valuable insights, such as ways to speed up the collection of funds and frees up time for finance teams to concentrate on strategic decisions to promote growth and innovation. However, several businesses still do not have access to real-time insights. For example, most CFOs rely on bank statements and monthly, quarterly or annual data being manually consolidated in spreadsheets. This process is time-consuming and fails to facilitate real-time identification of potential risks or accurate forecasts. Therefore, incorporating AI into the overall finance automation strategy can significantly benefit an organisation. Moreover, financial processes can be automated and manual errors reduced through data analytics, making the finance team more efficient and freeing up their time to focus on more valuable and strategic tasks.
Leveraging data analytics tools
By scrutinising data from various systems, AI offers a comprehensive 360˚ view of current and future cash balances and flows. The use of data analytics tools can help in utilising real-time financial data to make better-informed strategic investments and decisions. CFOs can keep track of crucial financial metrics like costs and revenue and decipher patterns or trends that may indicate areas requiring improvement.
According to Deloitte, 48% of CFOs aim to curtail expenses in the next 12 months. By using these newly acquired data insights, CFOs are more likely to identify areas where cost-cutting measures can be implemented and processes automated.
Software tools integration
The number of SaaS platforms used by organisations worldwide is surging year on year, making up 70% of total company software use, and the percentage is set to grow to 85% by 2025. Moreover, large companies use, on average, 177 SaaS applications. These numbers highlight the broad range of SaaS applications implemented in various business sectors. Although finance teams only use a fraction of these apps, such as accounting, financial planning and analysis tools, data from other departments and functions are still necessary for optimal performance.
Therefore, finance teams require efficient access to data from multiple software platforms within their organisation. While manual methods like custom code and APIs can be used to share data, the most effective solution is integration, as teams now use many software platforms on average.
In modern finance teams, using multiple software platforms to perform daily tasks requires cross-functionality for optimal efficiency. As a result, it's critical for any other finance-related software to integrate seamlessly with their accounting software to achieve maximum efficiency.
Bespoke and customised tech solutions
Performing efficiently is key to any business. However, there is no one size fits all approach. CFOs should focus on solutions that cater to their precise needs and provide a bespoke tech stack to help transform specific financial operations.
- Transparent overview
Having a clear and up-to-date view of the company's finances is crucial for informed business decisions, especially in relation to making strategic decisions based on financial reporting. Cloud-based services enable access to financial data from almost any device, eliminating the need to postpone necessary payments due to uncertainty.
- Digital receipts
Keeping receipts and invoices is mandatory for accounting to track expenses accurately. Presenting them digitally helps prevent destruction and theft, making them easily accessible when required by tax authorities.
This can be made more convenient through software programs that offer reimbursement options, making it much easier to claim, approve and pay receipts within an app. As a result, this process reduces the time the employee spends out of pocket and gives financial teams more visibility over a previously obscured business area. In addition, push notifications can remind finance teams to approve payments quickly rather than having to search through emails.
- Customised card payments
Spend management software can also provide customised card payment options, allowing budget control by setting individual limits or handing out virtual cards for one-time payments. This even allows external contractors to make necessary payments for business-related services like subscriptions and flights.
- User-friendly interfaces
Interfaces that integrate with accounting tools are critical for spend management software. This integration ensures that all incoming financial information is available for further accounting processes.
Although the Spring Budget indicated that only 10% of companies would pay the complete 25% of corporation tax, those affected by the news are alerted to the necessity of planning for future economic pressure and streamlining their procedures wherever feasible, especially in the current economic turbulence.
Fortunately, thanks to rapid digitisation, the past few years have brought about a permanent shift in business practices, resulting in markets becoming more equitable and competitiveness intensifying. Consequently, businesses seek creative ways to gain a competitive edge, regardless of the newly emerging and ever-changing circumstances.
It is crucial to effectively integrate new technologies, such as AI and RPA, into the finance function to identify and alleviate these risks and promote growth. CFOs that implement accurate tracking tools, streamlined software integrations, and a bespoke tech stack can dramatically help their business navigate challenging economic conditions and, as a result, drive a company forward.