The cost of inaction: An urgent call to upgrade accounting processes.

If you’re like most mid-market to early-enterprise companies, you’ve probably built up — or inherited — a number of systems in your financial tech stack to manage spending. The legacy ones include Expensify, bill.com, and Concur. You’ll have a card program like SVB, or maybe a software-enabled one like Ramp or Brex. But, in this new era of cost savings and efficiency, the limitations and expense of these point solutions are increasingly clear. Not only do multiple systems cost more, but the modern approach to spend management does a better job. It’s designed to control spending and streamline the interrelated, and continuous workflows associated with the process from intake to the final booking. 

Ultimately, a consolidated platform designed to handle end-to-end processes is going to be more cost-effective and efficient. Consolidation will lead to higher productivity and better risk management. 

The push and pull of taking action.

There are two reasons to get on board and take advantage of these benefits sooner rather than later:

1. The costs of your messy tech stack will accumulate as you delay investing in a modern, optimized solution.
2. There is measurable value to a consolidated solution for company spend.

I’m sympathetic to the resistance of a rip-and-replace exercise — it demands time, attention, and investment from teams who have been stretched with re-forecasting, runway management, new fundraising challenges, closing the books, and adapting to a whole new business environment. 

But it’s more critical than ever that we not rely on “good enough” processes that cost more, expose us to risk, and place an increased burden on our teams to spend extra hours on manual tasks. The benefits of a better process accrue to both Finance and the total employee population.  

Set up now for future success.

Improving the productivity of our teams needs to take center stage, not only because the cost savings will help us through this era of belt-tightening but because the improved efficiency will leave us better situated to accelerate out of the turn. Recent analysis  by both Bain and McKinsey has confirmed a Harvard Business Review seminal study showing companies that lower their cost structure by investing in operational efficiencies perform significantly better after a recession.

While taking action is a good idea, taking the right action is an even better one. Experience shows that companies waste over one-third of their software spend because employees don’t use the purchased software. Upgrading to solutions that people love to use ultimately improves ROI and should be an important criterion for judging solutions. That’s why Airbase’s modern spend management was designed to create a first-rate user experience for all stakeholders. 

Build for scale to avoid the need for future action. 

Not only is operational efficiency important in the current environment, but it’s also important in times of growth as companies scale. Since finance teams don’t — and shouldn’t — add headcount at the same rate as other parts of the organization, we must do more with less. This is why scalable software is essential. And, with growth comes an increase in the number and complexities of the challenges faced. 

Approval chains become more complex, the number and needs of stakeholders increase, transaction types and volume multiply, and compliance and audit readiness become more important. A scalable system lets you add these requirements without having to go through yet another replacement exercise in the future. 

Surprising lessons from a crisis. 

It’s true that finding the bandwidth to tackle an upgrade is a serious challenge. The B2B software purchasing life cycle has become increasingly drawn out and characterized by longer buying cycles and indecision. A Gartner study found that 77% of respondents described their software purchasing processes as complex or difficult. 

But when businesses were forced to pivot quickly in the spring of 2020 in response to the onset of the COVID-19 pandemic, some unexpected developments occurred.

1. Transitions happened much, much faster than expected. In a McKinsey study, executives reported that prior to 2020, they would have predicted that implementing new business operations technology would take about 672 days. But when their hand was forced, they were able to implement the necessary changes 25 times faster than they predicted — in just 26.5 days. 
2. Those who were able to pivot quickly ultimately emerged stronger. A majority of top-performing companies said they were the first in their sector to implement new technology. 

With the serious challenges of today’s business environment, I would argue that the urgency to make changes today is every bit as important as in 2020. 

Opportunity cost when weighing the cost of inaction.

The cost of inaction can be measured as the future streams of ROI that you miss out on by delaying action. ROI also factors in time savings for your team, which is more critical in the current environment. It’s simply not feasible to spend money throwing more bodies at a problem. The cost savings of a consolidated spend management platform, plus the marginal revenue that can be earned with a more efficient card program, create a positive ROI. 

Consider just one of the types of savings companies experience — the hours of manual work bringing AP data together. A recent PYMNTS study found that AP teams spend an average of 18% of their time doing manual work. This one factor can be assigned a monetary value and projected out for as long as you put off taking advantage of an upgrade. Add to this savings not having to pay for multiple platforms and eliminating wasted or fraudulent spending, plus the additional revenue earned with optimized payment methods, and an ROI worth your team’s valuable time emerges. 

Now is the time to act.

In an uncertain environment, the impulse to stick with the processes you know (however inefficient) can be strong. But things won’t get easier if those processes aren’t supporting your team today. There’s a saying that I think is apt right now: Diamonds are forged under pressure. Finance teams that allocate scarce bandwidth to implementing better systems will find they are rewarded with a clear and bright future.   

Take the first step — schedule a demo with us!