We’re all feeling the effects of economic uncertainty right now.
The nation is giving mixed signals, like a decreasing unemployment rate coupled with a reduction in the nation’s workforce numbers...and to make things more confusing, no one seems able to agree on whether the nation is really in a recession right now or not.
This is in part because the definition of a recession is hazy in and of itself. While there is no singular definition, a recession can be typically be identified by a few key indicators, including:
- Income stagnation
- Rising unemployment
- A decrease in manufacturing
- A reduction in consumer spending
When it comes to some of these telltale signs, our current economy doesn’t quite fit the mold: The unemployment rate continues to decrease, for instance, which is usually indicative of a strong labor market.
But with two consecutive quarters of negative GDP and progressively worsening inflation, there remains an undercurrent of fear that the economy will soon be pushed past its breaking point.
For many businesses, this uncertainty rekindles trauma from the impact of COVID-19. The pandemic forced businesses to reactively adapt to new ways of working—a transition for which very few were truly prepared.
Now, the threat of more change looms...leaving businesses to wonder how they may best prepare for what’s to come.
The truth is that there will always be unknowns, but companies that are proactive can prepare themselves now for whatever lies ahead.
Automating your accounting processes is a great place to start in this preparation. During a recession, it can give you a competitive advantage over other businesses that rely on manual processes by allowing you to:
- Cut unnecessary costs
- Save time and redirect employee efforts
- Strengthen vendor and customer relationships
- Gain better insights into your cash flow
Let’s examine each of these advantages of accounts payables automation in greater detail.
Cut Unnecessary Costs
In periods when the economy is volatile, every margin matters...making it even more important for businesses to do away with unnecessary expenditures.
A frequently unnoticed—and expensive–cause of overspending is paper-based accounting.
The average cost per paper invoice processed is about $11.57. For businesses that process hundreds to thousands of invoices every month, these fees add up quickly.
And these aren’t the only costs associated with manual invoice processing: Human error, including data entry mistakes and missed payment deadlines, are also costly.
Businesses facing the threat of recession can’t afford to be lax in these areas, especially when early payment windows offer savings opportunities.
Accounting automation is a great way to cut these costs. With features like automated invoice processing and integrated vendor payments, you can reduce your reliance on physical supplies (like paper, ink, toner, stamps, etc.) and ensure that you capitalize on early payment discounts with accurate, timely deposits.
Save Time and Redirect Employee Efforts
Part of recession proofing your business involves proactively establishing a framework for your teams to be as efficient as possible: and automation is one tool to help you achieve this.
Accounts payables (AP) automation eliminates repetitive tasks with:
- Optical character recognition (OCR) technology, which automatically captures, codes and indexes data from scanned files based on historical invoice processing
- Automated workflows, which eliminate wasted efforts spent transferring documents between departments and chasing down approvals
- Three-way invoice matching, which compares invoices, purchase orders (POs) and receipts to identify any discrepancies on your behalf
- Automated vendor payments, which take the burdens of repetitive data entry and payment deadline adherence off of your AP teams
These automation efforts allow your resources to work at their fullest potential, without wasting energy on mundane tasks.
Strengthen Vendor and Customer Relationships
Strengthening relationships with existing customers is always important, but client retention becomes an even stronger focal point when lead generation takes a back seat during economic downturns.
Fiscal uncertainty also reminds businesses how important it is to maintain positive relationships with vendors.
When you’re in good standing with suppliers, they are more likely to go out of their way to help you–and this can empower your business’ success. Your vendors can help by negotiating pricing so that you stay in budget on projects or by calling in favors to help you meet your customers’ deadlines.
Their assistance is never more important than during a recession, and on-time vendor payments are one step toward maintaining a good rapport.
This step is easy to achieve when accounting tasks are paperless and AP workflows are automated. In fact, 96% of CFOs say that they are converting to digital payments in order to improve vendor and customer relationships.
Workflow automation software can help improve business relationships across the board, supporting your success in any economic climate.
Gain Better Insights Into Your Cash Flow
There’s a lot of room for error when it comes to cash flow visibility in a manual payment process.
Things like approval bottlenecks, lost or missing purchase orders, and reliance on manual journal entries can make your insights unreliable.
But introducing automation to your accounts payable department can eliminate these hang-ups, improving your cash flow management through an earlier and more complete knowledge of what’s outstanding.
By making your accounting system part of your digital transformation strategy, you gain access to features such as:
- Version control, which keeps track of invoice updates as teams are adjusting entries
- Accounting software integration, which allows you to manage all current and prior invoicing records from a central repository
- Configurable workflows, which automatically route invoices to approvers
- E-signature submissions, which offload the burden of chasing down approvals
These capabilities grant more accurate and up-to-date insights on your business processes, giving you the tools to plan and assess your business strategy with greater acuity–and this is key to building your recession resistance.
Prepare for What’s Ahead
To prepare your business for whatever awaits our nation’s economy in the coming months, be sure your accounting cycle is fully paperless and automated. This is a great step to help your business stay efficient, productive, and one step ahead of your competition.
For more on this topic, check out the recording from our webinar, “Recession Proofing with AP Automation,” where we shared our tips on how to best prepare your business for periods of economic uncertainty.