How payments processes can help finance teams mitigate ongoing disruption

As the world emerges from the pan­dem­ic, many busi­ness­es are start­ing to feel more con­fi­dent.

But they must still con­tend with redrawn expec­ta­tions around the work­place and changed con­sumer habits, forc­ing many to reassess their growth oppor­tu­ni­ties. Well-pub­li­cised issues around ris­ing costs and sup­ply chain prob­lems also con­tin­ue to cre­ate headaches, sig­nalling no end in sight for the dis­rup­tion and uncer­tain­ty that finance teams have had to tack­le.

How­ev­er, there is still the oppor­tu­ni­ty for growth for those who can grasp it. And the finance func­tions who best respond to these chal­lenges are the ones that can remain flex­i­ble and dri­ve new inno­va­tions to help adapt to an increas­ing­ly unpre­dictable world.
Chief finance offi­cers and their teams need more time to focus on the areas that mat­ter, and to con­tin­ue dri­ving effi­cien­cies and inno­va­tion in the finance func­tion.

Reassess­ing and upgrad­ing pay­ments func­tions can help, mit­i­gat­ing some of the prob­lems cre­at­ed by ongo­ing volatil­i­ty. Whether it’s spend­ing on fuel, adver­tis­ing or spare parts, improv­ing B2B pay­ment process­es can help free finance func­tions up from admin­is­tra­tive work, cre­ate more cer­tain­ty and improve work­ing cap­i­tal.

There are sev­er­al impor­tant areas where this can make a pos­i­tive dif­fer­ence.

B2B pay­ments are back on the rise. Recent data from Amer­i­can Express found that, after a very chal­leng­ing peri­od for UK busi­ness­es, busi­ness spend­ing rose across near­ly all cat­e­gories in 2021, reflect­ing renewed opti­mism.

But this is still an area where busi­ness­es car­ry inef­fi­cien­cies and have not yet ful­ly digi­tised their oper­a­tion. The same research found that around 40% of UK busi­ness­es planned to start or fur­ther auto­mate both mak­ing pay­ments to sup­pli­ers and receiv­ing pay­ments from cus­tomers in the fol­low­ing 12 months.

This sug­gests that while they see the clear ben­e­fits of doing this, there is still some way to go to unlock the full val­ue that can be gained from these changes. This unnec­es­sary admin­is­tra­tive work could be hold­ing back finance teams.

Sec­ond­ly, one of the biggest areas of con­tin­ued uncer­tain­ty is around the com­plex­i­ty of glob­al sup­ply chains. Geopo­lit­i­cal dis­rup­tion, severe weath­er, the Covid-19 pan­dem­ic and labour short­ages have all con­tributed to unplanned ris­es in costs and unex­pect­ed prob­lems with sup­ply.

As a result, many busi­ness­es have thought dif­fer­ent­ly about sup­ply chain man­age­ment – from how they select sup­pli­ers to how and what they pay in order to con­sol­i­date oper­a­tions and keep cash flow healthy.

To sup­port this effort, finance teams should con­tin­ue to build rela­tion­ships with busi­ness­es across their full sup­ply chain, map­ping this net­work of com­pa­nies and iden­ti­fy­ing oppor­tu­ni­ties to reduce risk. Scru­ti­n­is­ing pay­ment terms will also high­light the areas that most impact on cash flow, there­by iden­ti­fy­ing vul­ner­a­bil­i­ties or unnec­es­sary expo­sure.

Many buy­ers are under­stand­ably look­ing for sup­pli­ers with more flex­i­ble pay­ment terms to fos­ter greater sub­se­quent agili­ty in their busi­ness. But they must invest in these rela­tion­ships to strength­en sup­ply chains. Prompt, effi­cient and easy B2B pay­ments are vital to keep­ing sup­pli­ers on ami­ca­ble terms.

Final­ly, one of the key new roles of the finance func­tion is to help the busi­ness make smarter deci­sions. But it can’t be across the whole busi­ness all the time.

Digi­tised pay­ments don’t just offer more cer­tain­ty and secu­ri­ty, they also gen­er­ate valu­able strate­gic insights. The data har­vest­ed can be used to build greater vis­i­bil­i­ty around busi­ness spend and help inform bet­ter deci­sion mak­ing in the finance func­tion and beyond.

An effec­tive and high-per­form­ing finance func­tion can cre­ate the frame­work for the wider busi­ness to make bet­ter deci­sions. A deep­er under­stand­ing of both the exter­nal envi­ron­ment and the organisation’s resources, which in turn gen­er­ate time­ly and rel­e­vant insights, will deliv­er greater val­ue cre­ation over time.

While the finance func­tion has always played a key role in sup­port­ing bet­ter deci­sion mak­ing and busi­ness growth, we are oper­at­ing in extra­or­di­nary times. Those finance teams that grasp the imper­a­tive to inno­vate and improve busi­ness process­es will be best placed to dri­ve suc­cess.

For more infor­ma­tion, vis­it americanexpress.com/uk/working-capital

Pro­mot­ed by Amer­i­can Express