Prepare and Adapt: How Businesses Can Cope with the Inflation Surge
Automating finance functions can help companies control costs and improve efficiency despite rapid rise in the cost of living and geo-political uncertainty.
Inflation rising to a 40-year high. Continued supply chain disruption. The crisis in Ukraine – first and foremost a human tragedy – but also a driver of major consequences for the global economy.
Economic and geo-political trends are converging to create a challenging start to 2022.
In the UK, fuel, energy and food costs are rising sharply, increasing financial pressure on millions of households and creating cash flow concerns for many businesses.
How can UK companies, and in particular, small and medium-sized businesses (SMBs) adapt to rises in the cost of doing business? How can finance departments help businesses navigate turbulent economic conditions and supply chain challenges?
Let’s take a look at some advice for adapting to current economic pressures, starting with the recent tax incentives announced by the UK government in the March Spring Statement.
Take Advantage of Tax Breaks for Tech Spending
The UK government says that it is trying to help businesses shoulder inflationary pressure and other economic challenges.
In the Spring Statement, Chancellor Rishi Sunak announced a cut in fuel duty of 5p per litre for the next year and an extension of research and development tax incentives to include data and cloud computing costs.
Some of the details, including which software qualifies for the tax incentives, still need to be ironed out. But the aim is clear: encourage business investment in technology to increase innovation and productivity.
“Our companies invest just 10% of GDP each year, compared with 14% in our competitor countries,” the Chancellor said in his statement “…Our tax system doesn’t reward investment as much as other countries do.”
The government is investing £600 billion over the next five years, he added. “We want businesses to invest more too.
No Budget or Spring Statement will ever please all businesses or citizens. And with living standards set for a historic fall over the next 12 months, according to a forecast by UK’s Office for Budget Responsibility, many experts claimed that the government could be doing more to help citizens and businesses cope with worsening economic conditions.
Politics aside, however, from our customers’ perspective, the Spring Statement did include some good news – an acknowledgement from the government that technology can help businesses of all sizes, become more innovative and grow.
Technology to Control Business Expenses
Many companies are now increasing their technology budgets to tackle perennial challenges − including minimising running costs.
Following built-in procedures and tracking employee-initiated business expenses (such as travel and expense claims and supplier invoices), can help you keep them under control and spot potential rogue payments.
Take a common scenario in a company’s supply chain. Some goods you’ve ordered are delayed because one of your key suppliers has a shortage of workers and problems with its own suppliers.
In search of a quick fix, one of your employees shows initiative and buys the goods themselves, later claiming back the cost by making an expense claim. The goods, which you’ve already paid for, are eventually delivered − meaning that your business has paid twice for what was supposed to be one item. The item also happens to be out-of-policy and not fit for purpose.
The right finance software can give businesses a clearer picture of what employees are spending money on and ensure compliance of that spending upfront. It can also help companies detect other waste, such as duplicated payments, which can easily go undetected and further drain your finances.
Expense management software like Concur Expense can help finance departments track and control employee expense claims in real time. Our business customers can, for example, use expense software to set monthly limits on expense claims and, when combined with budgeting software, work out ways to cut fuel costs and improve delivery efficiency by optimising delivery routes and loads in vehicles (for example, through less ad hoc orders).
Automating Admin
Changing tedious and time-consuming manual business processes into automated ones can save businesses time and money.
For businesses, and especially their finance teams, an additional advantage is getting a clearer view of your costs, such as how long it takes to raise an invoice and other daily operational tasks.
Paper forms and disjointed back-office IT systems that don’t talk to each other can mean that your operating costs creep up. They can also harm productivity because your employees are wasting time re-keying information from one system into another − for example, from your accounting system into your ERP system.
Finance software can automate these tasks and smooth admin. And after two years of job cuts and spending freezes for many finance departments, automating everyday tasks can help boost staff productivity and morale by allowing them to spend time on more interesting work, such as forecasting, business consultancy and cashflow analysis.
There aren’t any magic solutions and the economic backdrop in 2022 looks set to remain tough. However, by controlling expenses and automating back-office tasks, businesses will be better placed to cope with rising inflation and other economic challenges.