By Louis Carbonnier, Co-founder and President of Hokodo
In the rapidly changing landscape of B2B e-commerce, finance functions are struggling to keep pace. The B2B e-commerce market is forecast to reach $2.641 trillion in 2024, yet CFOs and finance leaders are feeling the pressure to balance growth with financial controls.
In fact, our recent investigation revealed that nearly half (46%) are finding this balance difficult to achieve. They’re grappling with how to maintain robust financial controls – essential for accurate reporting and resource management – while simultaneously driving strategic initiatives.
Without a clear strategy nor the digital tools to bridge the gap between growth and control, CFOs and their finance teams risk being left in the dust as the B2B sector continues its rapid digitisation.
Set your controls, and grow
Financial controls ensure responsible management of resources and accurate reporting. They are key to mitigating risk and ensuring a company is operating reliably and compliantly. However, if such controls are too stringent, they can impact growth initiatives; lead to delays and missed opportunities; and damage business revenue.
The tug of war between setting financial controls and not limiting growth is a constant battle in thee-commerce strategy of B2B commerce businesses. Commercially-minded CEOs, for example, may want to take the brakes off any controls that hinder growth while members of the finance and compliance team push back over the heightened risks involved. So, is striking a balance between the two factors possible?
Rather than see the two sides as opposing forces, they are in fact inextricably linked. Finance leaders can establish short and long term financial strategies that incorporate goals for both controls and growth. For example, they could set out plans for both the next year and the next five years that project revenue and growth in line with a variation of financial controls, finding the optimum balance. If implemented correctly, these controls can actually contribute to growth not harm it.
Automate to innovate
Technology, and in particular automation, is a key part of the puzzle in allowing finance leaders to strategise effectively. Repetitive, time-consuming and objective tasks like manual data entry and re-keying, report generation and recurring invoices are ready-made for automation.
Not only does automating such activities free up time for finance leaders but it also ensures much higher levels of accuracy, thereby reducing risk while enabling growth. Moreover, it increases a finance function’s efficiency and adaptability, something crucial in such a fast-paced and digitally-driven landscape.
Ultimately, automation empowers finance leaders to spend less time on administrative tasks and sanity checking numbers and more time on creative growth initiatives: they have scope to innovate and discover the best ways to balance controls with growth.
Ensure being risk-averse doesn’t stifle growth
A level of risk is an inherent part of business. From gambling on partnerships to being bold with marketing campaigns, it can deliver rich rewards; it’s not only needed to drive growth but is a healthy way of operating. That being said, too much risk means companies can breach regulations, accrue fines and suffer negative growth – misjudged decision-making can put a company in a perilous position.
Therefore, CFOs and finance teams by their very nature can lean into risk-averse policies. A safer strategy that still allows for a sustainable operation can be seen as the perfect balance. However, it’s imperative to ensure that this risk aversion does not stifle growth. If a finance team is too quick to clamp down on initiatives with stringent controls, e-commerce competitors not bound by the same limitations will simply forge further ahead. Simultaneously, not adapting controls quick enough to a changing market can create uncontrollable risk.
Walking this line can come down to communication and collaboration. Business leaders can pitch ideas for growth and then finance leaders can sell the benefits of controls for their ideas in reducing risk while still hitting performance goals.
The finance leaders with a deep understanding of financial data and market trends can discover and evaluate these growth opportunities themselves. Sometimes it’s worth asking if there is just as much, if not more, risk in not doing something as there is in doing it.
By mapping out short and long term financial strategies with goals for both controls and growth, finance functions can strike the balance for optimum business performance. Harnessing automation frees up time for this strategising and informs it with highly accurate insights.
Together, these two elements can help companies collaborate internally and hone their risk versus reward strategy, ultimately enabling them to thrive as e-commerce and digital practices become the norm rather than the exception in B2B.