At a time of market corrections and economic uncertainty, financial operators are concerned with two things: how long will it last and how prepared their companies are to weather the storm. We are clearly in one of those times.
“There’s more of a general acceptance that these conditions may be here to stay, so what do we need to do?” Airbase Chief Financial Officer (CFO) Aneal Vallurupalli asked in a conversation with PYMNTS.
Leaders of companies of all sizes are asking themselves the same question, he said, while also looking to rationalize expenses against the top-line revenue they are expecting for the next three or four quarters.
As a result, more companies are changing their ethos from “growth at all costs” to efficient growth. In doing so, they are elevating a whole new set of metrics to focus on.
Amid this shift, Vallurupalli said CFOs and finance leaders can have an impact by helping to model their companies to those metrics, drive alignment around the investments that impact those metrics, and provide the tooling required.
“That’s our job, that’s what we’re here for,” Vallurupalli said. “It’s also to help the company make better decisions with the data that we have in our hands.”
In this type of market, it’s important for companies to have systems such as a spend management platform, he said.
“The space for our product is well positioned during this time,” Vallurupalli said. “It is what we fundamentally do. We help companies save on every dollar they spend, we give them tools to control spend, and we help them get more visibility into how they are spending to ensure they’re spending to plan.”
This is also a time when companies could benefit from other efficiency efforts to digitize, automate and optimize their processes.
For example, Vallurupalli noted that on average, the most manual form of check payment costs a company $8 or $9 per check issued, due to the costs of people processing those checks and sending those checks. However, moving to a digitized form can reduce that to about $1.75. Taking it a step further, when a company shifts vendor payments to cards with cash back, they become revenue generating.
“That’s important in a market where you’re looking to save dollars on operational processes — being able to pay faster — and ultimately you’re saving the company dollars because you’re spending more efficiently and you’re able to pay your vendors with full visibility,” Vallurupalli said.
Controlling Your Own Destiny
While the current macroeconomic environment is clearly challenging, he said it’s vastly different from the recession of the late 2000s, when commercial lending completely shut down, or in March 2020, when pandemic lockdowns triggered mass layoffs and brought the economy to a complete halt.
In contrast, companies are still hiring, consumers are still shopping and moving about — albeit with a renewed sense of frugality. As such, the present environment is one in which companies should pause, take a breath and pressure-test their models, rather than capitulate, Vallurupalli said.
“I think that an environment like this actually forces companies to get back to the basics of efficient growth and [move] a little bit away from an exuberant, ‘go after any opportunity’-type sentiment,” Vallurupalli said. “Here at Airbase, we’ve always believed [it’s important to] control your own destiny — and so we see this market as an opportunity for us to shine.”