Automation and Timing: The Benefits of Investing in a Down Economy
PYMNTS interviews Isaac Itzkowitz, founder and CEO at Global Rewards, about the current economy’s impact on cash flow and how companies can watch their bottom lines while still planning for the future.
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Current economic conditions have almost everyone concerned about cash flow, regardless of whether they have problems with it. Itzkowitz said he has perhaps encountered only a single client in the past 90 days for whom cash flow is not a priority. However, that does not necessarily mean that all those businesses are struggling. Rather, expectations that they will need to have cash on hand to weather economic uncertainty are driving many companies to tighten their belts. Itzkowitz said this is reflected in how little has been invested by venture capital and private equity firms so far this year.
Transparency and visibility in spend management is a core part of ensuring that companies are getting the most out of their cash flows. Some companies may be focused primarily on future goals if they are just starting out or building further. For those that are sustaining, however, the bottom line is king, Itzkowitz said. Squeezing even a few percentage points out of cash flow can make a big difference in the long term. At the same time, scaling back or cutting costs is not always the best way to get there. In fact, economic downturns are often the best time to be building and looking for opportunity.
Investing in technology can be a challenge for smaller firms but is often even more beneficial than for larger firms. Itzkowitz said that habit and cash flow may impede some smaller companies from investing in automation or other technology. If a process is not obviously broken, a small business is particularly unlikely to try to change it because it simply has too many other things that feel like bigger priorities. However, implementation may be easier and the resulting savings may be more impactful for those small businesses. A smaller business may have only a single person affected by automation, but automation can also multiply the effectiveness of that one person in an outsized way.
Automation simplifies or eliminates frustrating steps without adding complexity. Following the outbreak of the pandemic and the move to remote work, it became more obvious how much time and effort was wasted on processes such as chasing down employee receipts, Itzkowitz said. Companies take no more joy out of harassing employees than employees do out of repeatedly being asked for their receipts. Firms are also faced with few options to incentivize, such as locking down company cards, that do not interfere with employees doing their jobs. Automation removes friction from reconciling and takes work hours out of the equation.
Spend management technology is becoming table stakes in every industry. In the past few years, all types of industries have seen significant moves toward automation. Even industries that had been long dependent on archaic processes began to learn about application programming interfaces (APIs) and systems integration. As that becomes more common, it will be a real line item for businesses across the board. What was “gravy on the top” is going to become essential. Itzkowitz said he does not know whether it is true that every company will become a payments company, but there will be automation to put into every single component of how a company runs.
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