How digital transformation of A/P, A/R can help fight inflation

To effectively fight inflation right now, optimization of your company’s working capital needs to be top of mind.

“You don’t want to overlook profits or ignore profits, but it’s really all about cash. Cash is something [that] once you spend it, you can’t unspend it,” said consultant, author and former CFO Carl L. Young during a ResourcefulFinancePro webinar.

According to Young, efficient and sustainable cash flow is possible – even in an inflationary business environment with stretched out A/R payments, pressure from vendors to pay up front, rising interest rates (making financing one of the least attractive options for securing capital) and a supply chain that’s prone to unexpected problems.

Fight inflation by streamlining A/P, A/R cash flow

To fight inflation, it’s going to take hyperfocused tactics for keeping sufficient cash on hand to meet business obligations, especially in a time when customer payments and collections may be coming in at a slower pace, Young said. And the key to making it happen may be investing in a fintech solution.

Fintech automation solutions on the market are capable of managing your internal cash flow with real time visibility at all times – even with a dispersed, hybrid workforce – and moving crucial A/P and A/R functions away from inefficient, high-touch, document-oriented models.

Giving one example where cash savings from going digital can really add up, Young said that a single printed paper customer bill for $15 can cost anywhere from $35 to $50 to generate and mail.

According to Young, some of the benefits of adopting automation fintech that delivers impactful return on investment (ROI), drives cash flow and fights inflation:

1. Streamlining A/P and A/R into a “fully-integrated core, paperless, transaction-based” payment system and cash and collections system accessible to team members working from anywhere (including on mobile devices)
2. Time saved on billing and cash recognition and reconciliation via real time connection of all transactions and accounting and information systems to your general ledger
3. Better control over waste, misuse and fraud
4. Enhanced ability to anticipate and authorize payments, rather than detecting and controlling them (which Young compared to “trying to drive [a] car face down in the trunk”)
5. Reduced data entry time due to AI invoice data extraction
6. The ability to accept a variety of payment types, including ACH and credit, debit and virtual cards, and
7. The ability to integrate A/P and A/R transactions with your banking, customer, working capital and fulfillment transactions.

And it’s catching on with your peers. In a recent small business trends survey conducted by Fundbox, 90% of respondents said that integrating new tech into their business is having a positive impact.