CFOs are set to increase spending in 2016, even with rising interest rates and impending regulations. But will that spend go towards increasing process efficiency?
This blog first appeared on the Corcentric website.
In its fifth annual survey of CFOs late last year, TD Bank found that 69% of respondents are optimistic about their company’s performance and 61% intend to increase capital spending in 2016. CFO.com published some results of this survey and the responses are intriguing. At the time of the survey, the Fed had not yet raised the interest rates, but most executives and finance professionals had already considered that increase as a foregone conclusion for the end of the year. Yet, that potential increase in rates didn’t seem to be affecting CFO spend intentions. In fact, 74% of the executives stated that the rate increase would not impact their borrowing. Now that the rates have gone up, whether that’s true or not will become clear.
Shifting or uncertain government regulations and health care reform still rank as the top concerns for CFOs, but there is not a great deal executives can do to impact those issues. However, when it comes to business issues they do have some control over, streamlining the cash flow cycle and maximizing working capital are the main concerns. Of the 300 executives surveyed, 29% indicated concerns regarding timeliness in collecting payments; 21% spoke about outdated systems creating inefficiencies in operations; and 17% expressed concern about manual processes associated with payment initiation. This may explain why the largest expenditure to get an increase in 2016 would be technology. Fifty-eight percent of the executives indicated that technology was their top priority.
In a world where businesses are expected to do more with less (or at least, with the same), those back-office, low value-added functions that used to be acceptable costs to a company now not only need to “pay” for themselves with greater efficiency and cost reductions; they also need to take on the mantle of strategic player in the enterprise. Manually handled, paper-intensive processes cannot do this. No finance function exists in a vacuum anymore. Accounts payable is now only one piece in the purchase-to-pay continuum and accounts receivable is but one step in the order-to-cash process. Silos are breaking down and collaboration has never been more important.
The technology that’s made this transformation possible is now available to businesses of all sizes. Automated solutions not only eliminate the errors, long timeframes, and burdensome approval process; they do something much more important. Successful solutions provide anytime, anywhere visibility into transactions; enable tracking of supplier compliance; and offer robust reporting, analytics, and business intelligence that can give enterprises the data needed to maximize growth. Many companies have turned to third-party SaaS providers to implement, deploy and manage the invoicing and payment functions, enabling the CFO and other finance professionals within the organization to focus on the knowledge received in order to grow their business. This is really a paradigm shift affecting businesses globally.