Shifts in strategy to combat the changing economy

Payables – in fact the finance function in general – is in the throes of a dramatic evolution. Both in the wake of current events and under the sway of longer term socio-economic and operational drivers. Could this gradually give rise to a clearer, more transparent payment culture? …  asks Sami Peltonen, VP of Purchase to Pay Product Management at Basware.

We’ve all heard of buzzword bingo, right? Maybe you’ve even played it.

Just in case, here’s how it works. It’s a bingo-style game where participants prepare bingo cards with buzzwords and mark them off as they are mentioned, with the goal of signaling “bingo” when you’ve completed a row. While some play publicly with a group, I imagine some of us quietly play while sitting in a meeting, listening to a presentation, or participating in one of today’s zoom calls. You keep a mental checklist of predictable, cliché words and phrases that are frequently used.

You know the ones. Transformation. Low-hanging fruit. Circle back. Ducks in a row. Singing from the same hymn sheet – we all have our favorites.

But, there is one in particular that invariably appears near the top of the list these days. “Change” and “the new normal”. There’s no doubt these words are currently responsible for a whole array of conversations and twitter streams. The thing with clichés though, is that they often become clichés precisely because they carry at least a grain of truth.

The massive disruptions taking place across the economy and financial landscape are a perfect example of this definition. How will the ‘new normal’ manifest itself in the real world?

First and most obvious, is the current and ongoing global pandemic, that is impacting global financial management and the world economy. Whether looking to protect operations, digitise existing offline processes, drive and continue business in the long-term, or all three; we are seeing an immediate shift in the purchasing and payment strategies of a number of large organisations.

For example, UK supermarket giant, Morrisons, is among those trying to ease the pressure on their suppliers – especially their smaller suppliers – with the introduction of more favorable, accelerated payment terms. Such tactics are examples of both self-preservation and the desire to help others – to ensure a healthy supply chain. What is good for a supplier and wider ecosystem, is ultimately good for the business, which has pushed a number of commercial and socio imperatives swiftly up the corporate agenda.

Another example is business continuity and cash management. If a firm can’t stock its shelves, in real-life or metaphorically, it can’t do business. If it can’t see and control business spend (upstream and downstream), how can it efficiently manage its wider operations?

Such considerations are crucial, not just in crisis situations, but also when ‘normality’ resumes. Which brings us to the real point – to consider the pandemic and its effects in isolation is to look at the trees and ignore the wood.

A whole spectrum of factors stimulates the reshaping of spending behaviours and processes, with the “stay at home” orders representing a major inflection point, resulting in:

• Shifting customer habits and expectations.

• An increasingly competitive commercial climate.

• The growing visibility of Corporate Social Responsibility, and how brands are acting in these times.

• Stronger emphasis on supplier relationships.

• The dramatic rise in the recognition and value of data as an asset.

In addition, none of these changes can be properly and profitably addressed while being held back by slow, manual, paper-based payment processes; neither can other key imperatives like rapid ROI and cost savings be realised and released.

So, what will be required to deliver maximum benefit to both businesses and the broader ecosystems without lengthy and/or costly implementations? Adopting a best-of-breed AP automation and network at the core of your procure-to-pay (P2P) process. The kind of automation and workflows that enable remote operations, more spend visibility and control, greater financial agility, closer supplier relationships and collaboration, and ultimately better business experiences for all.

And I’d say, there’s nothing cliché about that.

Learn more

To learn more about the benefits of AP automation and how Basware can help you naviage these strange times, downloading our eBook: Turn Accounts Payable into a value-engine or read the EIU Report on what’s now and next for finance and procurement.