Fixing Spend Management’s ‘Horse vs. Car’ Problem

Spend management has a horse vs. car problem.

Krishna Panicker, the recently appointed vice president of product at Airbase, told PYMNTS that process and workflow automation are creating a number of new opportunities to simplify back-office operations and move away from Excel spreadsheets. However, many managers and executives at small and midsize firms — especially the folks making and receiving payments and managing cash daily— are simply unaware of new innovations that offer wholesale improvements.

“The bar is historically quite low for people in finance,” he said, “we’re talking about a profession that has traditionally worked in siloed apps.”

In general, the finance department has not been connected to other departments and may not even have direct links to the accounting operations or real-time visibility into operations out in the field.

Read also: More Control, Better Visibility Boost Biz Spend Management Outcomes

Change however takes perspective, after all, the person who is only used to riding a horse and has gotten comfortable doing so has no idea what a car can do for them, nor can they comprehend the wholesale transformation that comes with this new technology. In short, they may be set in their ways.

In today’s uncertain economic environment, cash flow management is more important than ever, and companies, just like consumers, are tightening their belts. Improving operations means margins improve too, and better spend management gives a lift to cash flow. Better and more predictable cash flow, in turn, means these firms may be able to tap credit and capital markets (lenders like to see better cash flow visibility, of course).

Hurdling Some Challenges

Compounding this lack of awareness is a mountain of technical debt, where all manner of operations have been stitched together with apps, software and hardware. Managing those far-flung functions takes time and attention away from actually growing the business itself.

“It’s death by a thousand cuts,” remarked Panicker. “You get lost in the weeds, and that becomes the norm.”

But in embracing modern solutions like Airbase, Panicker said: “you can get full visibility, to save time — and turn time into money.” The companies that have made the leap, he said, are the ones that are tech-first.

“They come in with fresh eyes and tend to adopt solutions faster,” he said.

That stands in marked contrast to the smokestack economy firms, the manufacturers — and even some retailers — reliant on legacy infrastructure that has been in place for years, even decades. Getting those traditional firms to pivot to platforms and virtual cards requires outreach and education.

But no matter the firm’s age or the vertical, Panicker said, one trend that is gaining traction rests with bringing multiple “domains” of a firm into a single area.

“So if you are using two, three or four pieces of software, you might want to fold these into a single program,” he said.

Any monetary costs of doing so are far outweighed by the improved visibility and cost savings that come with that consolidation of technology.

“We look at your full spend and we can now start seeing opportunities to save these companies money,” Panicker told PYMNTS (and even make money with cash back options). “Giving that level of visibility and intelligence for managers and down to the employee levels is empowering,” he said.

The digital trends in place even before the pandemic are accelerating, Panicker said, and there is no turning back for SMBs who get a glimpse of how things could be — if they leap to modernize their approaches.

“You’ve been on the horse but then you see the car — and you say, ‘wait a second. I didn’t know you could even do that,” Panicker said, “That’s what I want now.’”

Read also: Misses: Siloed Point Solutions; Hits: Consolidated, Integrated Scalable Software

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NEW PYMNTS DATA: THE TAILORED SHOPPING EXPERIENCE STUDY – MAY 2022

About: PYMNTS’ survey of 2,094 consumers for The Tailored Shopping Experience report, a collaboration with Elastic Path, shows where merchants are getting it right and where they need to up their game to deliver a customized shopping experience.