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Finance Leaders Prioritize Sustainable Growth to Offset Inflation and Economic Uncertainty

Finance Leaders Prioritize Sustainable Growth to Offset Inflation and Economic Uncertainty

Finance departments look to automation to support growth strategies and mitigate inflationary costs

Tipalti, the leading global payables automation solution, reveals fresh insights into the strategies of global finance leaders in high-growth businesses amidst the current economic climate, with almost 8 in 10 (78%) believing sustainable growth is now more important than growth-at-any-cost.

With interest rates at their highest level in 14 years driving up expenses and supplier costs, finance leaders are also recognizing that automation is a key factor in supporting sustainable growth plans. The new research, commissioned by fintech unicorn Tipalti, surveyed and interviewed 500 finance leaders in fast-growth businesses across the US, UK and Benelux. The findings revealed that over three-quarters (78%) of finance leaders agree that their accounts payable (AP) function can play a key role in offsetting higher costs related to inflation.

However, a lack of automation continues to swallow finance teams’ hours with 36% of their time still being spent on manual processes rather than tasks that aid strategic initiatives. Businesses remain largely focused on growth in the current economic climate – with just over half (51%) stating that they are focused on maintaining their original growth plans, while 45% are focused on more sustainable growth.

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“Two years ago, ‘growth-at-any-cost’ was considered successful and the reason why valuations skyrocketed, making it easier than ever to grow a startup,” said Rob Israch, President of Tipalti. “Falling from their pandemic peak, the collapse of Silicon Valley Bank followed by other regional banks sent shockwaves throughout the finance sector, impacting liquidity in the tech space, meaning many are now faced with a very different reality,” he continued.

Businesses are now beginning to plan for growth beyond the economic downturn, and visibility over finances is hugely valuable. On average, 77% say that as a business, they need to stop being reactive and begin planning beyond an economic downturn. In fact, 79% say that AP automation can enable them to plan beyond the current slump and support growth objectives by freeing up time for strategic activity (83%), enabling timely supplier invoice payments (84%) and allowing less friction and complexity to ease business expansion (80%).

“Sustainable growth needs to be strategic and measured,” continues Israch. “Successful businesses will be focusing on their core proposition and doubling down on the business segments with the best productivity and economics – essentially those that provide the best ROI and attractive payback for sustainable growth. To be future fit, businesses must ensure their finance team is agile and equipped with the tools, such as automation, to withstand change,” he continued.

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AP challenges remain

On the surface, the research suggests that time spent on manual processes is improving, but the reality is that higher volumes of supplier invoices combined with the same (or less) resources mean that finance professionals are forced to process invoices faster. In fact, the time to process an individual supplier invoice has dropped from 50 minutes in total in 2021 to 33 minutes in 2023. This creates additional risks of errors and burning out the accounts payable team.

While AP automation is high on the agenda, departments appear to be automating their processes slowly and in increments rather than addressing their processes holistically. 32% say that AP won’t be fully automated until the end of 2024, while 31% say 2025, meaning these challenges are only set to continue for the foreseeable future.

It is clear that AP inefficiencies have a knock-on effect on an organization’s reputation. Four-fifths (81%) of those surveyed say that now more than ever, they need to ensure supplier relationships are as good as they can be. But if AP inefficiencies continue or intensify, finance leaders expect to suffer from issues like damage to supplier relationships (34%), an inability to find enough time to contribute to strategic decision-making (33%) and a weakening negotiating position with suppliers (31%).

Amidst economic uncertainty and technological transformation, the finance function evidently has a leading role to play in delivering growth and business success in the years to come.

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