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HOW CAN SMALL BUSINESSES HAVE A MORE PROSPEROUS 2022?

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Paul Christensen, CEO of Previse

2021 was a hard year for British businesses. From the UK’s smallest suppliers to its most powerful retailers, none have been infallible to the impact of the ‘perfect storm’ of problems created by Coronavirus, Brexit and supply chain disruption.

The economic impact of the pandemic has shown how precarious the UK’s market is, with financial pressure on small businesses being ramped up by the ongoing supply chain crisis. A critical shortage of labour and resources, combined with rising prices, has led to warnings of a “winter freeze” looming over UK businesses. The need to replace legacy systems with innovative, technology-driven solutions has never been more glaring.

Throughout many industries, digital transformation has been delivered at an unprecedented rate since the onset of the pandemic. From the NHS to SMEs – we have come together to explore new ways of doing things, support one another and, crucially, get the job done. The supply chain shouldn’t be any different.

One thing which every business can do to help build a more resilient supply chain and support the small business economy, is to pay suppliers quickly. Fast payment helps SMEs to plan for the future. It gives them the confidence to invest and to employ more people. It keeps cash moving quickly throughout the chain. So, what steps can large corporate take to ensure that they and their suppliers have a more prosperous 2022?

 

Paul Christensen

Let’s make slow payments a thing of the past

In 2022, increasing numbers of suppliers will demand to be paid quickly as fiscal conditions tighten. A demand which, until recently, has all too often gone unheard.

Before the pandemic, late payments to suppliers amounted to over £23bn per year. Additionally, since the pandemic, buyers across many sectors have pushed for longer payment terms, which squeezes suppliers’ cash flow even further. SMEs are the worst hit. SME turnover alone is estimated at a whopping £2.2 trillion annually. From drivers and farmers to beer brewers and bakers – small businesses are the backbone of our economy and will drive our recovery.

Yet, The Federation of Small Businesses found that 62% of small businesses had experienced either an increase in late payments and/or had payments frozen completely as a result of Covid-19. And as unsecured creditors, if their customers are forced to close down, they have very little chance of recovering their invoice values.

This puts the whole supply chain at risk of financial difficulties, which, in turn, has a severe impact on the others that rely on these suppliers. This ‘contagious’ effect of financial distress and potential closures exacerbates the economic hardship faced by British businesses.

Cooperation between large corporates, banks and fintechs will be essential to reducing and ultimately ending the slow and late payments crisis. If businesses work in harmony to pay their suppliers faster, Britain’s economy will thrive. Now is the time to invest in our SMEs and provide security to the 16.6 million Britons they employ.

 

Digital transformation will drive us forward

Paying invoices on day one isn’t just good for suppliers, it’s good for corporate buyers too. By doing so, businesses can benefit from significant process efficiencies, and contribute to a healthier supply chain. With ESG criteria now sitting firmly at the top of the agenda for businesses across the board, paying suppliers faster demonstrates a real commitment to sustainability and strengthens supply chains at very little cost.

Large corporates can adopt instant invoice payment policies in a way that would also be sustainable long-term for their own cash flow. The technology and processes exist to enable suppliers to access cash immediately without buyers having to speed up their own payment processes.

If 2021 highlighted the need to ‘build back better’, then 2022 will be the year that technology will be used to promote widespread strategic change and sustainable growth. Now is the time to update solutions of the past with new innovations as we seek the green shoots of renewal. Paying suppliers instantly is the single largest contribution any business can make to improve supply chain resilience. Adopting smarter technology will be a part of this.

 

Business

Using OKRs to transfrom business in a new working environment

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Managing the challenges of rapid business growth while also adapting to a hybrid world of working forced by the global pandemic will be among the topics raised at this year’s international OKR Forum 2022.

National business coach Peter Kerr will highlight how the business management framework tool of OKRs can help overcome the challenges faced by hypergrowth companies, while also helping create a strong team culture to establish resilience to adapt to new ways of working.

Peter Kerr, MD of the rapidly expanding UK-based specialist coaching consultancy AuxinOKR, will be a key contributor to the OKR Forum event, being held virtually on February 3. He will be talking to Lavanya Gopinath, director of operations at Chargebee, about the challenges of rolling out OKRs across a global tech business with a geographically dispersed workforce.

The OKR Forum is the fourth event of its kind featuring a mixture of keynote speakers, expert workshops, and case studies of OKR implementation. Delegates can learn from international brands such as LinkedIn, Colgate-Palmolive, and Renault on how to engage teams for better outcomes with the agile goal and performance management framework, known as OKRs.

AuxinOKR, which has clients around the UK and overseas – including SAP, ASOS, Which?, Bitstamp, Chargebee and South African bank absa – has a proven record of helping ambitious companies and organisations establish an OKR strategy that enables them to achieve their goals.

Chargebee is a leading international subscription billing platform on a fast-track trajectory powering some of the fastest-growing SaaS and subscription-based businesses in the world. The company, valued at $1.4b in April 2021 has more than 3,000 customers across the US, Europe and rest of the world. Digital transformation has accelerated the opportunities for Chargebee, and the company saw OKRs as a tool to drive cultural change across the business.

Peter Kerr says: “Chargebee is a fabulous company with a great product. Digital transformation across more companies has created huge opportunities for Chargebee but they recognised they needed to change themselves to become a stronger, more agile, and resilient business.

“Chargebee saw OKRs as a way to create a focus and clarity across the entire business, spread across several countries. OKRs have helped establish a new culture, one where everyone is clear about the company vision and key goals and their roles in helping achieve growth and success.

“And, of course, this was made even more challenging by being implemented during a pandemic. OKRs helped Chargebee accelerate the push for collaboration, transparency and understanding during this difficult period.”

This year’s OKR Forum online event will feature world-class OKR experts such as Ben Lamorte, Felipe Castro, Francesca Nardocci, Melanie Wessels and many more, along with leading international companies.

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The evolution of the CFO: 91% still carry out repetitive and manual tasks despite the new demands of their role

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‘The future CFO’ research conducted by Xledger, the cloud finance software provider, finds that there is a lack of support in helping CFOs to evolve with the new demands of their role. Some of the top frustrations that CFOs cited in their current roles include having to carry out repetitive and manual tasks (33%) the reliance on hard copies of documents or legacy spreadsheets (27%) and bottlenecks in the flow of information (26%).

Other key frustrations were being unable to spend time on strategic tasks (23%), being able to work efficiently when away from the office (23%), the number of silos making it difficult to work collaboratively with colleagues (20%) and a struggle to demonstrate compliance to regulators (19%).

Repetitive and manual tasks seem to be indicative of the finance role, with an enormous 91% stating that they need to carry out at least one of the above repetitive tasks as part of their job and this could be impacting their ability to carry out other aspects of their role. The research found that the more senior you are, the more likely you are to be carrying out repetitive tasks, with senior figures averaging 25 hours per week, compared to 15 hours for other finance decision makers.

Mark Pullen, CEO at Xledger comments, “The fact that the UK’s top strategic decision makers are spending up to 25 hours a week on low value-added tasks is astounding. The results of this research may highlight not only the stresses of the CFO themselves, but of their whole team. The frustrations and seniority differences are vital in informing the current dynamics, behaviours and commitments of the CFO role. If they are to evolve effectively, it’s evident that more support is needed to harness their strategic value. Business growth rarely comes as a by-product of doing more with the same level of resource – unless you factor in technology.”

When digging further into the study, there are some notable trends in terms of seniority and sector. For example, 38% of larger companies (5000+ employees) vs 28% of smaller companies (less than 50 employees) are frustrated by repetitive, manual tasks. This is likely a result of larger organisation’s needing more rigid processes in place than smaller, potentially more agile organisations.

Notably, the inability to work efficiently when away from the office was felt more by senior finance directors and CFOs (33%) than other finance decision makers (16%). This could be put down to a need to collaborate effectively with colleagues in more senior roles. 30% of senior financial directors and CFOs also stated that they’re frustrated about the number of silos and inability to work collaboratively compared to just 14% of other finance decision makers.

Xledger is a leading  true-cloud finance technology for mid-market organisations. With a suite of automation features including OCR, automated purchase invoice and expense handing, reoccurring and professional services billing and in-system payment processes our value, is giving back time to CFO’s and their finance departments, allowing them to spend more time of higher value-added activities.

The Future of the CFO study was conducted among 529 CFOs and financial decision makers in the UK during August and September 2021 by Sapio research.

 

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