Official figures of the United Kingdom believe that the country is on the verge of a potential economic recession. With a 0.2% contraction between April and June, this drop marks the first decrease in six and a half years. And even though this mere 0.2% may seem like an infinitesimal number to worry over, it drives home even harder the fact that 100% spend visibility should play a vital role in your organization.
Post-Brexit Trade Tension
The UK’s economy performed worse in the second three months of 2019 than was originally predicted. Though the first quarter of the year saw a 0.5% growth, the growing uncertainty amid an ever-nearing Brexit date (October 31, 2019) and other economic impacts such as car plant shutdowns likely lead to the GDP’s 0.2% decrease.
For example, in the recent EIU report sponsored by Basware, over 400 finance and procurement executives were surveyed regarding their take on the three global macrotrends predicted to influence purchase-to-pay (P2P) the most over the next 2 years—digitization, automation, and global trade trends.
When it comes to expectations regarding future trade, geopolitical issues dominate. In the survey, the two trends most widely expected to have the greatest impact are post-Brexit trade negotiations (cited by 23% of respondents) and the escalation of the US-China trade war (21%).
Regarding post-Brexit trade negotiations, 3 out of 10 survey respondents were most concerned about the potential decrease in business opportunities. Additionally, 44% of respondents were most concerned about increased supply chain complexity with 44% reviewing internal controls and procedures and 41% forecasting costs through simulations in order to prepare for the changes.
Decreased UK Economic Confidence Leads to Recession
And, again, though -0.2% may not seem like enough to cause concern, this decrease permeates more than just economics. It also greatly impacts the public’s view and confidence in the UK economy itself. According to a 2017 PWC report, uncertainty among households, businesses, and financial markets affect the economy in different ways. Households could temporarily reduce spending in order to budget better in uncertain economic times. Businesses could turn to production cuts and even decrease employee pay. Financial markets could increase the cost of credit because of decreased banking policy rates.
So, in this third quarter, it’s imperative for the UK to take steps to turn this negative trend around. If not, it’s likely a recession would be confirmed. Times of uncertainty like this, however, are prime times for organizations to step up, show their prowess, and take concrete steps towards ensuring 100% spend visibility.
Automate S2P for CapEx and OpEx Control
100% visibility is important to fully understand your complete capital expenditure (CapEx) and your operational expenditure (OpEx). With total visibility across your organization, you’ll have increased control to better produce savings and generate working capital. And what’s the best way to ensure you’ve got 100% spend visibility? Process automation.
An automated source-to-pay solution helps to centrally capture each and every transaction made—from sourcing all the way through the payments process and each step in between. This financial data is then collected and transformed into actionable insights. From these insights, you’ll better understand your processes to continuously improve them and increase compliance.
You’ll see how long your invoice process takes from beginning to end, which invoices are at risk for late payments, what’s contributing to maverick spend, and approval times. The more complete your data is, the better technological features such as AI and machine learning operations function. These advancements contribute to business-building technologies like guided purchasing, predictive analytics, benchmarking against competitors, and smart coding technology. And lastly, when you have all your spend data in one, easy-to-view location, it becomes much easier to spot potential fraud and eliminate errors.
Ready to learn more?
Download the EIU report to learn more about how over 400 Procurement and Finance executives from around the world are preparing for the world of commerce post-Brexit as well as readying their organizations for the future of digitization and automation.