Recent circumstances have forced many companies to reforecast and update their financial strategy for the uncertain times ahead. Now it’s time to put your plan into action.
Executing on a new financial strategy is no small task, especially given that this economic shift occurred only several months into 2020. Companies that just started allocating resources to new projects for the year now must turn on a dime, pausing or canceling those initiatives and reprioritizing investments.
In this economic downturn, companies must act quickly and decisively—and then put controls in place to ensure that the new financial plan is executed correctly in the coming weeks and months.
1. Streamline spending
Review how much you are spending with each vendor, and re-evaluate ROI of each expenditure. Annual transactions that began last summer are likely up for renewal soon. Take this opportunity to cancel services that aren’t critical and renegotiate with ones that are.
Maintaining visibility into spend can help you get ahead of software creep and stop zombie subscriptions in their tracks. You can also eliminate office-related expenses that no longer apply in a remote environment, such as coffee and snack deliveries, cleaning services, or even rent if your lease is up.
Consider funds that have been approved but not yet spent. Withdraw or reallocate approved budget before it is spent, if appropriate. Confirm the timing of future payments, and be sure to include committed spend in your reforecast.
Don’t slash spending and be done with it. Reallocate budget intelligently. Invest in relevant activities, such as putting the marketing events budget to marketing digital spend.
2. Put controls in place
You’ve streamlined your current budget. Now, you need to put controls in place to govern distributed employee spending and ensure your adjustments take hold. A single company-wide email about the new purchasing policy won’t cut it.
Rather than admonish employees after the fact when they spend out-of-bounds, enable proactive controls that ensure compliance with policy from the get-go. Requiring pre-approvals on all card and invoiced spend allows finance to oversee distributed spend and correct spending before any money goes out the door.
Establish spend limits on cards so that employees can’t go over budget. Using unique card numbers for each transaction, and tying every purchase to a specific vendor, allows finance to track each purchase and confirm that money is spent appropriately. Issuing virtual cards will facilitate this, especially since most employees are remote.
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3. Leverage technology
With everything on your plate during this challenging time, devoting resources to securing pre-approvals on all spend may seem like a gargantuan task. And even if your finance team was able to obtain that level of oversight, it could easily slow employees down and hinder productivity—that is, if you rely on legacy P2P systems.
Distributed spend management software was purpose-built to help streamline the purchasing process and optimize spending. By proactively enforcing policy and automating manual workflows, this modern solution gives you total control and visibility into spending, without adding friction.
In rough economic waters, you need all hands on deck to conduct strategic analysis and develop useful insights. Adopting solutions that automate tedious processes will free your team up to focus on high-value tasks that will directly impact your company’s bottom line.
4. Get a quick win
Many traditional P2P systems require too much time, money, and personnel resources to implement and roll out. This often isn’t an option for companies facing an economic downturn.
Finance teams need ready-to-work resources that can be implemented quickly, without IT support. Similarly, once the solution is up and running, it can’t require an additional hire to manage it.
With fast, IT-free implementation, distributed speed management software can get up and running quickly. Its conversational, user-friendly interface is embedded into employees’ existing workflows, which encourages adoption.
Furthermore, distributed spend management software will start yielding results quickly. This solution will give your finance team the confidence they need to identify where to cut costs, reallocate capital, and empower remote employees to move at the speed the market demands.