Business Recovery » Pandemic forcing companies to focus on slashing expenses

Pandemic forcing companies to focus on slashing expenses

As the pandemic continues to take its toll on businesses around the globe, companies are now focusing less on cash visibility and more on how they can reduce operating expenditure and increase automate to survive and thrive in 2020

According to a survey conducted by US-based software-as-a-service (SaaS) company HighRadius, two-thirds of corporates said in June that their top priority for the remainder of 2020 would be working to achieve better cash visibility. But questioned again at the end of September, the number of companies that said they were focusing primarily on cash visibility had since halved.

Instead, more than one in five companies now say their single greatest priority is to slash expenditures, while a third are focusing on initiatives to increase digitalisation and automation across their order-to-cash processes.

When asked what their organisation’s top priority would be over the next six months, a third of corporates said collaboration would be their greatest focus. By the end of September, that number had bottomed out to just 11 percent.

Both the June and September surveys were organised by HighRadius, and the results were then collated and reported as part of the SaaS-provider’s latest of two virtual workshops: Refining receivables – The smart approach to reducing risk and bad debt.

Yet while the workshop’s poll results did reveal a fresh drive to reduce expenditure and automate accounts receivable (AR) processes in particular, panellists were also quick to point out that cash visibility is a critical foundation companies have got to achieve in order to tackle emerging priorities like slashing expenses and increasing automation.

More important still, each company appears to be developing its own bespoke approach in order to do that.

“Doing a more proactive risk assessment of customers and having more visibility of where your cash is held has become a priority because of the crisis – and depending on the type of industry or how an organisation is set up, this is being approached differently,” Sam Dhingra, the director of solution engineering at HighRadius, explained at last week’s workshop.

“For some organisations it’s visibility, because they lack the visibility at a global level. For some, it’s more about making the processes proactive, and for others it’s about the need to automate quickly. But the way companies are looking at it varies depending on their journey in terms of automation and the customer base.”

Last week’s workshop not only exposed a heightened concern around operating expenditure for global companies, but also the subsequent need to automate finance-related processes as a result of those concerns.

When HighRadius asked businesses in June whether the pandemic had changed the future role of technology in how they optimise their cash flow, only 18 percent said the pandemic had exposed the need to automate their order-to-cash processes.

Asked that same question again in September, and nearly 30 percent of companies now say they are looking for more opportunities to automate.

The same number of survey participants highlighted how the pandemic had increased the need for greater visibility into their outstanding debt and DSO.

But according to Natalie Fedie, vice president of customer value at HighRadius, all these technology issues are driven by data – which is why teams must ensure the solutions they’ve got are capable of actually achieving the strategic goals their organisations are working towards.

“What I’m seeing as a focus area for the entire order-to-cash process is the ability to access data and the ability to be able to measure not just your current state, such as your indicators like DSO or net recovery rate, but all the way down to analyst productivity and also having access into customer behaviour,” she said.

Perhaps tellingly, there’s been a significant drop in the number of companies reporting no changes concerning how technology is being used to optimise cash flow.

When surveyed in June, 24 percent of companies said that constantly investing in the latest technology had been the key to their survival throughout the pandemic. Fast-forward three months, and that figure has shot down to just 14 percent.

“Having the ability to access more data makes you smarter-enabled to be able to make more educated decisions,” Fedie explained during the workshop.

“You’re doing a lot of work – maybe manually or in the same way you’ve been doing it for years. But having some additional automation is going to give you insight to the things that you’ve never even been able to do.”

To learn more about High Radius, click here.


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