By Ryan Demaray, EMEA MD for SMBs at SAP Concur
Although easing of lockdown restrictions enabled many organisations, both big and small, to get back up on their feet, disruptions to global supply chains brought on by the political instability within the region has now caused many of these businesses to rethink their long-term financial and operational strategies.
As businesses across the UK continue to be adversely affected by the ongoing cost-of-living crisis, small businesses (SMB) owners are particularly at risk of being impacted by the rising inflation rates and soaring energy costs. In fact, according to recent study by PayPal, which involved surveying over 1,000 SMB owners based in the UK, it was found that over 78% of owners were worried about the impact rising costs could have on the long-term sustainability of their business.
Rising inflation and its impact on SMBs
An increase in inflation rates implies a rise in price of all commodities and services including raw materials, products, supply stock and wages. And this inevitably leads to a substantial increase in operational costs. This means everything from the office rental to electricity and other utility bills becomes more expensive to handle and SMB owners end up tapping into their personal finances to manage these expenses, which is never ideal.
Just like large business organisations, SMBs also have the responsibility of helping their employees to cope with the rising cost of living. This includes offering pay rises and reviewing other benefits including pensionsto retainhighly skilled employees and to avoid the unnecessary costsinvolved in recruiting new staff.
Trading overseas also becomes problematic especially if the inflation rates in the country you’re operating from is comparatively higher than the others. Under such circumstances staying profitable in the international market turns out to be challenging as businesses now need to compete with lower prices offered by their foreign rival companies.
Can expense management solutions help SMBs to save money?
With relatively limited financial resources, SMBs should consider investing smartly in tech solutions that can help businesses make the most out of their existing resources. By taking a closer look at your current costs and innovating the existing expense and finance processes, SMBs can now better position themselves to respond and adapt to a changing business environment.
Some of the ways in which digital solutions can help businesses to stay resilient during uncertain times include –
Gain better visibility into costs
With improved visibility into financial costs, businesses can better understand where their money is being spent and gain better control over costs. This involves improving the efficacy of your existing expense management processes. SMBs often resort to using outdated expense and reporting systems that rely on paper-based processes or emailed files and these make it difficult for owners or business leaders to accurately track and stay on top of expenses.
By digitizing the processes and investing in the right expense management solutions, SMBs can easily implement, manage and control expense management policies across the organisation.
Cutting costs and re-allocating resources
When operating in an unpredictable business environment, organisations may need to re-evaluate their KPIs that focuses on growth or expansion and look into cutting costs in a more strategic manner. Using an integrated, cloud-based technology platform, businesses can now capture data that can essentially be used to gain a better view of where the money is currently being spent and reallocate funds, if necessary, towards suppliers and other operations that can help keep the business running smoothly.
Smarter spending to increase operational efficiency
In addition to cutting costs, companies can also use digital solutions to better identify suppliers or other business partners that can offer discounts or longer payment terms. These insights can then be used to negotiate more favourable terms with existing partners or perhaps even allow the business to seek out new supplier partnerships.
Expense management solutions can also help with making the most out of your existing staff by replacing inefficient, paper-based processes with automated solutions that can directly connect spending information to an accounting or ERP system, thereby eliminating the need to manually upload and enter data. This not only improves efficiency and reduce errors, but it also makes it easier for business owners to manage reviews and approvals.
Even thoughno one knows for sure what the future holds, SMBs are now being urged to adopt a new approach towards performance management and to future-proof themselves and strive through an uncertain business climate.
Whileinvesting in such solutions might initially seem like a costly affair, most of these digital tools are fairly easy to maintain and helps the business to better understand their spending habits and provide financial projections to better plan ahead for the upcoming weeks, months and even years.