Businesses have been working fast and furiously since March to pivot or transform their operations. But whether that has meant struggling with supply-chain disruptions, work-from-home woes, cost containment or payment delays, their responses to date have likely been reactive in nature. With the coming of a new year, it’s time for companies to put on their “proactive” hats, and plan for 2021.
What will 2021 bring, and how should you prepare? While more unexpected disruptions certainly could occur, the following five trends encapsulate the bulk of what procurement and payables professionals need to prepare for now.
More e-invoicing regulations, more risk
There has been and will be an increase in government mandates and standards when it comes to invoice receiving, processing and archival. The recent electronic-invoicing mandates by India and Germany are good examples of this. Heading into 2021 and beyond, global organizations can only expect more countries to jump on the e-invoicing bandwagon.
Governments are increasingly moving from post-audit models (compliance after the fact) to clearance models (upfront compliance with invoice standards), to maximize revenue from taxes. Moreover, government mandates differ significantly by geography and are constantly changing. Why do you need to be on high alert? Because the penalties for non-compliance can be severe.
Bottom line: Global invoicing and tax compliance is complex, fragmented and constantly changing. And it means that compliance can no longer be an afterthought.
Until recently, organizations would define an automation strategy, then evaluate whether it could also solve compliance issues. Now and going into the future, that process has been flipped on its head. For any organization operating globally, compliance must be a minimum condition of its automation strategy.
When looking to automate your supply-chain processes, make sure you select a service provider that can support your compliance needs in the geographies in which you operate.
Green invoice and payment automation
A new study by Coyote Logistics found that 81% of companies are more focused on sustainability today than three years ago. From initiatives designed to increase recycling or upcycling, to becoming carbon-neutral, brands are pledging ongoing dedication to sustainability.
For many industries, going green is no longer a choice. Consumer-goods organizations must reduce greenhouse gas emissions by more than half, or 92% relative to revenues, to meet 2050 targets, according to McKinsey. This pressure will cause the C-suite to call on all departments to find sensible ways to become more green.
Within the financial supply chain, paper is clearly an issue, particularly for invoices and checks. Paper invoicing has consequences far beyond just inefficiencies and higher processing costs. Almost 10% of trees cut down globally become paper for invoices. For an organization receiving 20,000 invoices a year, that amounts to 96 trees, 300 tons of water, and 24 tons of CO2 annually. By switching to electronic invoicing and payments, and automating other processes in the financial supply chain, your organization will reduce paper and CO2 emissions, and therefore your carbon footprint, too. In fact, switching from paper-based systems to electronic invoicing results in an estimated 36% reduction in emissions.
So, as you search for ways to cut your carbon footprint in the supply chain, look to e-invoicing and payment automation first.
Risk areas the pandemic exposed
Connecting with suppliers across the globe enables you to find the perfect supplier for your needs. But it also enables something imperfect: supply-chain risk. The pandemic has highlighted this risk even further, as organizations struggled initially with supply-chain disruptions.
According to a report from Resilience360 and Business Continuity Institute, 73% of companies experienced a detrimental supply-side disruption as a result of the coronavirus pandemic, and 40% plan to perform greater due diligence moving forward.
As such, many organizations will be looking into automating the risk-management process through solutions that increase visibility across the full supplier ecosystem, and reduce costs and labor associated with this process.
A mere 36% of companies know the geographic location of all their Tier 2 suppliers, while only 12% reported conducting due diligence measures for Tier 4, and 11% for Tier 5 and above, according to the Resilience360 and Business Continuity Institute report.
“Always-on” risk-management solutions, which provide timely notifications when change happens, are gaining popularity. They enable organizations to extend monitoring beyond top strategic suppliers to reach new supplier tiers and, eventually, give more visibility into the entire supplier base, including the long tail of smaller suppliers. Those numbers reveal an alarming need.
How can you compete globally yet mitigate risk (and sleep at night)? Gain access to continuous monitoring and timely notifications. You’ll be able to better manage your physical and financial supply chains.
Best-of-breed ecosystems over a single-suite approach
The financial supply chain is composed of many different processes, and there are multiple approaches when it comes to automation. For many years, organizations and analysts have favored the single-suite approach, relying on one technology provider to automate every step in the source-to-pay (S2P) process.
Such an approach — in theory, a one-stop shop — might sound appealing. There are certainly benefits to it, primarily in the form of a standardized user interface across the entire process, a single vendor, and one contract. But suites can’t provide best-of-breed functionality across the entire spectrum, and usually involve a lengthy, complex and costly implementation process.
While the pandemic has accelerated automation initiatives like never before, it has compelled organizations to invest in technologies that are quick to implement, and deliver faster paybacks and time-to-value.
Given these considerations, organizations are now considering an ecosystem approach, made up of best-of-breed solutions. This approach has multiple benefits. Organizations can leverage best-in-class, innovative functionality most suited to diverse processes within their S2P cycle, now and for the future. Plus, they have the ability to pick and choose only the applications that serve their unique business needs, enabling faster implementation and return on investment. Finally, this approach minimizes the risk of solely relying on one technology provider.
Think of it as one central hub — your “primary” vendor at the core — with spokes of specialty vendors extending out from it. You choose the “spokes” based on your custom needs.
To adopt an ecosystem approach, identify your most business-critical process, then choose a solution provider that can deliver on that first. Then start adding on the “spokes.” Some providers already partner with other best-of-breed technology providers, so you don’t have to source them yourself.
Remote work and cloud-based solutions
The pandemic made it clear that most organizations weren’t prepared for a far-reaching crisis of this magnitude. The immediate shift to working from home left many finance departments unprepared, causing major business disruptions in their operations.
Today, and for the foreseeable future, working remotely will continue to be the new normal, with 52% of organizations stating that they plan to make remote work a permanent option for the roles that allow it, according to the PwC Global CFO Pulse Survey.
With software-as-a-service (SaaS) solutions, which seamlessly integrate with ERP and back-end systems, the only technology that employees need to do their jobs is an internet connection and web browser. Armed with easy access to applications they need, finance teams can continue operating from wherever they are, ensuring there are minimal disruptions to the flow of goods, services, and money.
Cloud-based SaaS applications that enable a remote workforce will be a top business priority for organizations going forward. If you don’t have this solution, now is the time to consider it. While it may be a challenge to keep up with the pace of new technology, fintech and the supply chain are, and forever will be, married as one.