As COVID-19 executive orders limiting travel and group gatherings bring many employee expenses to a grinding halt, how can finance teams use this time to arrive on the other side of the pandemic better than before?
Just about everyone wants to put the past year behind them and return to business as usual. While some companies have been far busier than normal, others have struggled with economic uncertainty, changing regulations, and decreased demand.
The extreme circumstances of the last year forced businesses to take a hard look at all aspects of their organizations, from discretionary expenses and resourcing to supply chains and revenue—not just once, but month after month as the pandemic surged, waned, and surged again. Through all of this, finance teams worked tirelessly to keep organization leaders informed with reports, forecasts, and what-if scenarios. They learned critical lessons about agility, resiliency, and perseverance in the process.
Today, we have every reason to hope that we’re emerging from the worst of the crisis. But there’s a good argument that organizations should resist going back to business as usual when it comes to financial decisions and operations. That’s because the economic crisis revealed underlying inefficiencies, operational challenges, and wasted resources that were more easily ignored in better times.
Here are five fundamental learnings that finance teams and business leaders must remember as the economy moves into recovery.
1. Every business expense matters
It seems obvious, but it’s easy to forget, especially when your organization is fortunate enough to experience predictable or even growing revenue. How many times have you or your team built a budget based on “what we spent last year plus 10%”?
The crisis forced organizations to take action, examining every line item to decide where to invest and where to cut back. Most companies learned how to do more with less—decreasing discretionary expenses, halting travel, reducing real estate footprints, and shifting budget from low-priority projects to more strategic activities. Lastly, they made the tough decisions about staffing that everyone dreads making.
Exiting the pandemic, businesses should maintain a disciplined approach to spending and continue looking for ways to make every dollar count and help build or rebuild cash reserves for future emergencies. Use software with real-time dashboards to track all discretionary expenses, ensure that spending aligns to key priorities, and monitor results regularly.
2. Immediate, accurate data is essential in today’s economy
Over the past year, businesses felt the hard truth that when circumstances change daily, old data is useless for informing quick decisions.
The challenge is that “current” financial data is out of date long before it appears on reports and balance sheets. Financial reporting is often likened to looking in the rearview mirror, and this year, more than ever, leaders needed the financial equivalent of a GPS tracking pin to know exactly where they stood at any given moment. Finance teams were tasked with gathering the data, often manually, from a variety of sources and splicing it together.
It’s time to stop using spreadsheets to run your business. Spreadsheets are static, full of old data, and notoriously error-prone. Instead, leverage the newest generation of technology to see card transactions, travel bookings, and procurement spend in real-time. Companies with solid understanding of where they stand can make proactive decisions to invest in the business and feel more confident about making offensive moves.
3. Business spending has changed for good
The trend toward consumerization of business functions was underway long before the pandemic hit, with employees booking their travel online, bringing their own devices to work, and signing up for individual software subscriptions. With so many employees working from home, the pandemic only accelerated the change.
Consumerized, employee-driven spend represents a massive shift away from the old command-and-control central procurement model. It’s not just a shift in decision-making: It’s a change in spending behavior. The vast majority of purchases are made by credit card, which means most organizations have no idea what’s been spent until employees file expense reports at the end of the month or later, when it’s too late to adjust course.
Organizations need a better way to manage employee purchases. Issues for leaders to consider: whether employees use personal cards or corporate cards, policy updates for travel and remote work, and easy-to-use technology to track, audit, and control spending. Getting the whole company on a next-generation corporate card program streamlines the month-end close and reduces financial burden on employees. Plus, it means fewer checks, lower risk of fraud, and less manual AP processing.
4. The time for better technology is now
In the midst of the critical work of assessing their organizations’ resources and plans last spring, finance teams also had to close the books while working from home. Businesses that had largely digitized their accounting functions adapted quickly, while those whose processes still relied on paper-based or highly manual systems struggled.
When we surveyed finance leaders last fall, we learned that 91% of organizations had already undertaken or were planning to implement at least one technology initiative in the coming 12 months to help with day-to-day operations like managing expenses and invoices, reporting, and budgeting.
Before the pandemic, CFOs might have thought to hire an additional accountant to deal with things like tracking missing receipts and reconciling corporate cards. Hiring isn’t always an available option, but with the right technology organizations can get more done with fewer resources by streamlining and automating manual processes.
5. How we think about the office and business travel has changed
Last year, Center had just announced our first major product, and weeks later, the entire company was working from home, doing everything they could to build momentum for a new company during a pandemic.
Many people can’t wait to return to the office—myself included—but before we rush back to our old desks, business leaders have an amazing opportunity to think about what is most essential for business life going forward. How do you use flexible work arrangements and other perks to best attract and retain talent? When does it make sense to resume travel, and what trips and events are most critical to the business?
In my mind, these questions aren’t so much about the office and travel, but about how we bring our teams, customers, and partners together to collaborate, build relationships, and develop shared understanding about strategic goals. Of course business travel is an important driver of revenue, but it’s also increasingly going to be an important driver of company culture. Investing in the employee experience pays dividends. That’s because where you invest reflects your company values and culture.
Businesses continue to face hardship during this ongoing crisis, but those who used the experience of the last year as an opportunity to reinvent and become more agile will emerge stronger. Organizations need to set aside old habits and inefficiencies. Now is the time for finance teams to update systems and controls around financial operations, so they’ll be better equipped to manage in a post-COVID economy.
Naveen Singh is the CEO of Center, an enlightened expense management business for finance-forward companies.
This article originally appeared in BOSS Magazine.