The COVID-19 pandemic represents a major challenge for businesses that were already under pressure even before the crisis. Financial decisions now happen at a blistering pace, and at scale. Research from Accenture identified the frenzied strain on CFOs who used to make $100 million decisions each month or quarter, who now make $1 billion transactions each week, or even daily.
Businesses have also had to adapt their operations and service delivery for survival. The International Labour Organisation also found that 81% of Asia Pacific’s businesses have done so and almost half terminated staff or had plans to do so due to insufficient cashflow.
For the 97% of micro, small and medium-sized enterprises (MSMEs) in Southeast Asia, the crisis has created unpredictability and put a strain on anticipated cash flow. As a result, businesses must deal with the resulting fallout on employee salaries and business operations.
Making matters worse is how thousands of micro, small, and medium businesses in Asia have declared insolvency during the pandemic because of widespread disruptions to supply chains and demand.
While the pandemic is a once-in-a-generation disruptor that was nearly impossible to prepare for, it has underscored the need to build true resiliency in peace time before any unexpected crises. Businesses need to look inwards and take control of their spending and plan for the future.
Digital transformation goes into overdrive
CEOs in Southeast Asia are investing heavily in digital transformation to fast-track recovery, by rethinking portfolios and speeding up decision making through data analytics. Technology has been a key enabler keeping businesses afloat in the wake of COVID-19, and it has also been critical in the development of post-pandemic recovery plans.
To secure the bottom line, technology tools have proven to be important decision-making tools. Operating against the constantly changing backdrop of COVID-19, businesses must practice greater discipline when it comes to spend management. It is insufficient to only search for and deploy the most affordable digital platform or software-as-a-service (SaaS) solutions.
Smart spend management helps businesses survive and thrive
Spend management enables businesses to make informed procurement and sourcing decisions through a continuous process of collecting and analysing financial data, so that the business spends money wisely. Digitalising spend management processes allows teams to redeploy funds as required in the unpredictable economic climate.
And with most spend management software now based in the cloud, businesses will always have instant access to their data anytime and on any device connected to the Internet.
• Improving cash flow
Cash flow visibility provides business leaders with a view of what comes in and goes out of the company, and is vital to protecting bottom line. Nonetheless, keeping tabs on cash flow can be a challenge. It has been a problem that predated the pandemic and PwC’s 2019 Global Treasuring Benchmarking Survey noted that “more than a quarter of global cash is not visible to corporate treasury on a daily basis.”
Without full visibility of payables and receivables, it is hard to see if the business is liquid enough to withstand disruptions. It also makes it impossible to decide if spend can be reduced to save money. Businesses need visibility of software expenses or subscriptions to identify products that overlap with each other or have become irrelevant.
• Making insight-driven business decisions
Businesses that will thrive in the competitive post-pandemic landscape are the ones that can effectively plug leaks and reduce inefficiencies in their spending. Across most businesses, spending tends to be siloed in different departments like marketing, HR, sales, and operations so spend data is also scattered across different payment types and methods.
Organisations that are still relying on traditional expense management systems will realise that data is fragmented and stored in thousands of receipts. The best solution to this problem is to create detailed digital trails by collecting, standardising, and analysing spend data through digital receipt capture and automated invoicing and expensing.
Consequently, this benefits and enables business leaders to make forward-looking, strategic spending decisions.
• Enabling operational efficiency and growth
Digital spend management solutions typically come with a suite of automation features to streamline repetitive labour-intensive tasks, such as recording receipts and processing invoices. Spend management automation not only saves a substantial amount of time managing expenses, but also reduces human error and the risk of employees deviating from expense policies.
One of SAP Concur’s customers, Mitsubishi Estate Asia (MEA), was able to more than halve the time they spent developing expense reports and managing spreadsheets when the company automated their expense-claim management system. As a regional hub with employee expenses in various currencies, this freed up time for staff to focus on delivering their targets.
MEA’s spend management platform also gave them valuable insights to create more data-driven expense policies to further improve efficiency, and support the company’s expansion into Indonesia and Vietnam.
• Enabling businesses to focus on their purpose
Removing spend management from the equation, businesses are better able to concentrate on their purpose. Another of our customers is Globe Telecom in the Philippines, which migrated to an, easy-to-use system spend management system that provided complete visibility of their entire expense management workflow and improved employee satisfaction.
By solving their travel and expense challenges, Globe was able to focus on running their sustainability programme throughout the Philippines. Just four months after deployment, the entire company had shifted to the new system. With built-in integrations with other platforms, the shift allowed Globe to form partnerships that further helped improve customer experiences.
Spend wisely and plan for resilience
When done correctly, spend management can do wonders for a company’s bottom line and business resilience, protecting them from unexpected cash flow disruptions. Although reducing costs is one of its primary goals, spend management is not just about cost-cutting. It is also about optimising spending so that organisations derive more value from their expenditures. Such value creation will be a growing focus for businesses in the post-pandemic era.
Written by: Fok Wai Leng who is Managing Director (Southeast Asia) at SAP Concur
Read more: The Opportunity for Cloud-Driven Economic Recovery in Malaysia
Discussion about this post