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Why cloud technology will aid SMEs in being ready for a recession

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By Damian Hanson, Co-Founder & Director of CircleLoop

 

The state of the UK economy has been brought to light in the news by reports of high inflation and skyrocketing cost of living. Additionally, SMEs are facing uncertain times as a result of the most recent announcement that the Bank of England increased interest rates to 2.25%, the highest increase in almost thirty years. There is no doubt that we are currently experiencing one of the most taxing macroeconomic environments in a while and we anticipate additional rate rises next year.

According to Barclays SME Barometer, three-quarters of small and medium-sized companies are worried about the long-term impact the cost of living crisis, soaring energy bills and rising inflation will have on their business. So how can adopting technology changes and making investments in cutting-edge cloud technology will help them navigate these turbulent times?

What is likely to happen?

SMEs are the backbone of a healthy economy and are important contributors to job creation, new markets opening and global economic development. Unfortunately, when a recession hits new enterprises, startup funding and valuations suffer the most. Less money will be available for investment, making it more difficult and expensive to raise the capital needed to launch or expand a business. Some businesses won’t even get a chance to launch before they fail.

The difficulties differ for more established SMEs that depend less on funding. As there’s less requirement to start something new and more emphasis on holding onto what they already have, the aim is to withstand the pressures long enough to survive the recession. Some SME owners will need to acknowledge that growth may be unattainable during this time and focus on simply surviving the crisis instead with minimal losses.

Sales in some industries such as retail and consumer goods could struggle as customers tighten their belts. SMEs need to be cost conscious by streamlining business operations to reduce costs if needed  and satisfy the declining demand for goods and services,

Recession-proof your tech stack

All of this seems a little bit gloomy. However, your businesses can stand a better chance of being recession-proof with a little early planning and innovative thinking.

A good place to start is by reviewing your software and technology stack. Your company’s use of technology has a big impact on how much it costs to operate. Inefficient hardware or an overabundance of overlapping software may not seem like a huge deal in normal circumstances, but during a recession, these problems can quickly become a drain on money, time, and resources that SMEs simply don’t have.  Using software delivered in Software as a Service (SaaS) models is likely to be lower risk because these can be activated and scaled up or down, or even off, as required without long contractual commitments.

While it’s important to invest in the appropriate support for your business, it’s equally important to reevaluate those demands during a recession. Are there any technologies that your company doesn’t use frequently enough to make the investment worthwhile? Or perhaps there are ones that are vital but create more work because they don’t do everything you need and a better solution is required?

Advancements in cloud computing for business now enable easy integration of common tools. For example, a cloud-based business phone system used by your sales team can be connected to your CRM app(https://www.circleloop.com/integrations/hubspot), Office 365 and your email provider on one platform that’s easy for them to use and gain insights from, increasing their productivity and chances of success when it matters most.

The significance of maintaining marketing activities throughout the crisis is another recession-proof strategy to take into account. Many businesses changed their plans for scaling up and drastically reduced their marketing expenses during the 2008 recession.

Another recession-proof tactic to consider is the importance of retaining marketing efforts during the recession. During the 2008 downturn, many companies diverted their plans away from scaling up and cut marketing budgets dramatically. Later research found businesses that retained their marketing strategy and budget emerged from the financial crisis stronger, outperforming the market average by more than 30%. Food for thought in the coming months.

Stay Flexible 

A final but important note for SMEs and startups facing uncertain times ahead is to be prepared to adapt. Stay flexible.

As the recession turns the market upside down, what worked for your business in non-recession times may no longer be effective. Refusing to acknowledge the rapid changes happening to your customers, your employees and your supply chain is the equivalent of sticking your head in the sand. Making significant changes to your business model or pivoting your offering in the middle of economic uncertainty may seem high-risk but it could also be the difference between survival and failure.

Cloud-based or remote-enabled business tools are becoming more and more important for creating a modern and future-proof organisation. During a recession, businesses can’t afford to ignore the additional benefit of agility and flexibility afforded by these technologies during the turmoil. The abundance of data that these technologies can easily supply will turn into the crucial insights that your company needs to track to assure growth once the dust settles.

It’s not impossible for SME’s to survive a recession. Those that survived the past recession emerged from it leaner, more effective, more adaptable, and more conscious of how they define success. Instead of overreacting or underreacting to what lies ahead, adopt this mindset to stay afloat.

Business

Financial Services Makes Gains In Employee Engagement

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By Phil Chambers, GM Workday Peakon Employee Voice 

 

A new report shows that the financial services industry improved in almost all elements of employee engagement last year. Can such momentum be sustained?

After more than two years of change, one thing is certain: keeping workers engaged has become more challenging – and more urgent. Record numbers of workers have left their jobs in the UK. And, as turnover has increased, employee engagement – people’s mental and emotional investment in their work and workplace – has been tested. In today’s climate, engagement isn’t a nice-to-have; it’s a business imperative – especially as companies with engaged employees are known to reap benefits including higher productivity, customer satisfaction, and profitability.

The financial services industry hasn’t been immune from the so-called Great Reshuffle. But, according to Workday’s latest State of Engagement Report, it did make measurable gains in employee engagement during 2021. Of the 17 industries analysed, financial services’ engagement ranking jumped from ninth to fifth place.

The report analysed nearly 9 million employee responses from almost 2.5 million employees throughout 2021. It compared the engagement scores given by employees working in different industries over the 12-month period, as well as scores for the 14 drivers of engagement – including autonomy, goal setting, meaningful work, reward, and recognition.

Organisations in the financial services industry have been considered less   quick to evolve than others. PwC recently characterised insurance companies, for instance, as “traditionally risk-averse and slow to change”. But, as the report shows, financial services clearly made some improvements. It is noteworthy given the enduring pandemic-related economic turbulence of 2021 – and the fact that during that time global engagement scores overall slightly declined.

 

Where The Financial Services Industry Improved in Employee Engagement

Remarkably, the financial services industry saw increased rankings and scores in all but one of the 14 engagement drivers that the State of Engagement report measures.

Of all 17 industries analysed, financial services took top place for goal setting by the end of 2021 (up from sixth at the start of the year) and landed among the top three sectors for strategy and recognition too. These strong results indicate the industry provided clear direction to its people at both individual and organisational levels, and appropriately recognised employees when they met their goals.

The improvement in the industry’s overall engagement, however, was driven largely by a sizable increase in its environment driver score in 2021, suggesting that a significant number of employees responded positively to having more freedom around where they worked during the pandemic. Before the pandemic, it was unusual for financial services firms to offer flexible options at all. But, in 2021, more than ever before, many firms’ employees were working remotely or enjoying a hybrid of both remote and in-office work – as and when offices started to re-open. This unprecedented choice in where, how, and when they worked was appreciated, as the report indicates, by many workers in the sector.

 

Where There’s Room For Improvement

As the report found, many employees feel the amount of work they have is increasingly unmanageable. Workload continues to be a pain point across all industries globally, with workload satisfaction scores dipping slightly in 2021. At the end of the year, financial services received its lowest engagement-driver score for workload and ranked 11th among the 17 industries analysed.

This indicates employees in the financial services industry found their workload less manageable as the year progressed, which is perhaps unsurprising when considering the pandemic’s ongoing toll in many parts of the world, and the fact that remote working can lead to ‘always-on’ work lives.

To help mitigate burnout risk and diminished engagement going forward, financial services leaders and managers will need to stay close to their employees in the months ahead to find out how they can best support them, whether that’s with additional resources, greater work flexibility, or updated benefits. By regularly staying abreast of people’s needs and taking the necessary action, organisations can spot potential problems before they lead to resignations.

 

What The Industry Should Avoid Going Forward

In recent months, we’ve seen some financial institutions try to take a “return to normal” approach, requesting their people go back to working onsite five days a week. But, as the report shows, this approach may not be the best one for everyone, particularly as the past two years have revealed that many employees appreciate and benefit from a greater degree of flexibility.

Of course, not all organisations will be able to provide hybrid or remote arrangements for all their people. But greater flexibility doesn’t necessarily have to mean working remotely. It could mean more flexible scheduling options, or a shift in working hours to enable a greater work-life balance.

Either way, to retain the engagement gains achieved in 2021, the financial services industry should resist the temptation to look back, and must instead take learnings from the past two years. Amid so much economic and societal change, and with employees continuing to shift jobs in record numbers, companies cannot simply go back to before, but need to continue moving forward, listening to the needs of their people, and leading with empathy.

Specifically, leaders and managers in financial services will need to stay closer than ever to employee feedback, going beyond listening and working fast to implement change accordingly.

For the industry to continue making positive gains in employee engagement, it will need to: consider how to retain a degree of flexibility – updating models to reflect evolving employee needs; continue to provide clear individual and organisational direction to those working remotely and on site; create and maintain more manageable workloads through prioritisation and automating repetitive tasks; and continue to reward and recognise employees for their hard work and achievements.

While great strides were made last year, it’s more important now than ever that leaders in the financial services industry determine and understand how employees are feeling so that organisations can explore and shape a future of work that works for everyone.

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The FTX collapse: Lessons learnt for the CFO

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‘A complete absence of trustworthy financial information’ were the words used to describe the cause of cryptocurrency exchange FTX’s demise last week. Although an extreme example of incredibly poor risk and data management, it brings to light – yet again – the importance of getting financial planning right.

Following the collapse, the question on everybody’s lips has been – could this have been avoided? The answer is highly complex, however identifying, managing and mitigating internal and external risks should be at the top of senior leadership’s priority list – simple. The teachings here for CFOs across all industries are rooted in risk management. It was a lack of planning from senior executives that caused the current crypto industry crisis and should be considered a wake-up call to senior leaders across a multitude of sectors.

We are entering an uncertain economic winter, and CFOs are facing risks previously unknown, which are going to be impossible to mitigate without valuable insight and suitable technology. In the rocky months ahead, operational ‘leaks’ or financial losses will not be limited to crypto companies resisting the lasting effects of FTX’s collapse. If businesses across all sectors are to survive one of the most complex economic environments in recent times, CFOs will need to ramp up their risk management.

Hartmut Wagner

A Deloitte survey of CFOs found that 63% believe recession will hit within the next year and are already dealing with the sharp rises in financing costs. Additionally, the International Monetary Fund (IMF) has forecasted that global growth will falter from 3.2% in 2022 to 2.7% in 2023 because of tightening financial conditions in most regions. Ultimately, the outlook is challenging enough without the prospect of avoidable risks that can be prevented with the right planning and processes.

 

Automate systems or sink

Recent Gartner data shows that under one-third of CFOs are confident that technology they have available to them can ensure future company success. But to survive the recession and thrive on the other side, technology will be key throughout the finance function.   The Great Resignation has also added urgency for CFOs to automate more business and financial processes. The labour shortage, which started in hospitality and airlines, has hit the financial sector and has created a skill gap that senior leaders are battling to fill. No one is immune, as even Deutsche Bank and Goldman Sachs are suffering ‘talent wars’ as they fight to attract and retain finance professionals.**

Additionally, CFOs are facing ‘quiet quitting’, another problem that translates to increased employee disengagement which has recently gone viral across social media. The trend, gaining traction across Europe, encourages workers to avoid going above and beyond their job description and is lowering productivity levels. Automating the finance function, for one, alleviates the pressure on stretched teams by adding a virtual ‘team member’ that can take over repetitive and time-consuming transactional processes. This can break the negative cycle of further resignations as remaining employees will have more time to focus on strategic decisions, offering them the chance to become true value creators. Removing these arduous manual tasks will also attract employees and give businesses the upper hand in the ongoing ‘talent war’.

Take processing invoices as an example. It’s a simple but time-consuming task that can often be derailed by human error. Intelligent software can create efficiencies by reducing the time to completion and eradicate costly mistakes. It can also help to combat issues associated with ‘quiet quitting’ as disengaged employees will have time to focus on the tasks that they find more stimulating.

 

Achieving well-rounded cash visibility

In this period of economic uncertainty, cash is no doubt king and having a rounded view of company finances is crucial. Staying on top of a business’s cash position is tricky and slow if balances are still being drawn by hand. It’s labour intensive, time-consuming and there’s risk of being blindsided by putting valuable time into non-strategic tasks.

Instead, technology that uses artificial intelligence (AI) can provide clarity on current and future cash balances and flows, meaning CFOs can anticipate potential cash flow concerns before they become a problem. Plus, the technology can provide actionable insights into the spending and cash flow trends of a company, and AI can forecast potential hurdles and scenarios ahead of a business in a way that people alone can’t. This means the CFO’s decision-making powers grow and deliver better risk management. For a job based on data, implementing technology like this should feel like a natural progression.

 

The future CFO, now

The recent FTX collapse – rooted in a lack of financial planning – only highlights further that humans, without the right technology solutions, cannot deal with the risk management complexities in the modern era. Interestingly, a Gartner Survey conducted this summer highlighted that 45% of CEOs and CFOs would cut digital investments only as a last resort in difficult economic times. Employees and technology were prioritised over investments in mergers and acquisitions, which highlights CFOs’ recognition of the success of technology in driving efficiencies and protecting margins.

Even within industries less volatile than crypto, the threat of collapse is on the mind of most CFOs as we enter a period of economic downturn. For some, the risk might seem less obvious and, therefore, it’s impossible to accurately mitigate against without the right tools. Consequently, over the coming months, it is technology what will set one CFO apart from the next.

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