Unlock the Strategic Value of Spend in Uncertain Business Times
For years, our focus as CFOs was to allocate capital across many competing growth objectives. Tasked to build scalable finance processes to support company growth and manage the risks of geographic expansion, we spent our days working to determine where to invest in order to drive predictable top-line growth.
The COVID-19 pandemic changed our key objectives overnight. Following years of economic stability, we are now confronted with an unprecedented disruption to global supply chains, consumer behavior, and the free flow of goods, services, and people.
Suddenly, we must focus on the areas that are in our control, such as capital allocation, risk mitigation, and spend control. The strongest companies will take this market disruption as an opportunity to best position themselves for strength as they exit this crisis when it passes. This requires financial agility, control, and action.
To do this, the first immediate step is to stabilize our balance sheets and more specifically, cash. All cash expenditures need to be scrutinized and prioritized to determine which are essential and which can be deferred until the economic situation stabilizes. To manage this process effectively we must be agile in managing our control frameworks, approval processes, and capital allocation. This means making rapid changes like lowering the threshold for when approvals are required on spend, inserting more approval levels in the process for certain spend volumes or categories, mandating that spend only happens on-contract and pre-approved through a PO process rather than through a post-approved (invoice) or non approved (T&E) process.
In addition to optimizing our balance sheet and cash, we need to identify and remove risk across our supply chains. The impact of existing vulnerabilities will be magnified in today’s uncertain environment. On top of this, our suppliers face unprecedented disruptions due to the global pandemic and resulting economic impacts. We must get ahead of these risks and adjust our supply chain accordingly to work with at-risk suppliers, replace failing suppliers when needed, and add supplier redundancy where geographical risks are higher during this time.
To get a complete picture of our business spend and risk, we must partner closely with our finance leaders. This will enable us to take rapid action and support our organization so we can weather the current storm.
How to Unlock the Strategic Value of Spend in Times of Business Uncertainty
I invite you to join Magnus Bergfors, Lead Analyst at Spend Matters, and myself for a webinar that will explore key metrics and benchmarks to understand how well you’re positioned to use Business Spend Management to achieve the best operational excellence and bottom-line results. We will cover:
- Key metrics and benchmarks for building business resilience in uncertain times
- Advances in automation, analytics, and community intelligence—and the impact on the value of spend management
- Opportunities for finance and procurement teams to maximize the value of all business spend
All of the work we do to contain our costs and mitigate risk now will help us be agile and prepare to be opportunistic with investments at the right time. Ultimately, the economy will not stay down forever. In the interim, we must make sure that the choices we make today do not cause more harm than good in the long run. To make the right choices, we must understand our business spending and risks, and be able to operate with a scalpel rather than an ax. By taking the right action now, we can optimize spend while also setting our businesses up to thrive.