How Financial Close Automation Will Help Prepare Organizations For The New COVID-19 Supply Chain Challenge
With the holiday season on the horizon, the supply chains are preparing for a shift. A new survey conducted by Coresight Research found that 30% of respondents will start their holiday shopping earlier this year, prompting retailers to elongate their shopping seasons. Additionally, there is news that a COVID-19 vaccine is planned to launch by mid-October, opening up a new supply chain as hundreds of thousands of doses are being prepared to distribute.
This abrupt shift in the supply chain could potentially open up new distribution opportunities for transportation and logistics companies nationwide. However, many of these types of companies are still using manual processes for their financial processes instead of financial close automation, which jeopardizes the opportunities that distributing these new vaccines present.
With this increase in demand, the question begs – are these companies prepared for how this demand will affect their offices of finance?
Lag in Air Traffic and What it Means for Ground
Total worldwide air traffic in June was down 42% from June of 2019. When overseas manufacturing companies came to a standstill, retail companies began to rush in order to get enough inventory for the holiday season expected in early October. Companies like Amazon are expanding their ground transportation networks, opening new opportunities for small and medium-sized trucking companies. As more people are still choosing to stay home, companies have seen an increase in demand for furniture, appliances, exercise equipment, home goods, and residential construction goods. With the inability to transport many of these items by air or sea, companies are looking to ground transportation to fulfill the demand.
The surge in demand for ground transportation across the nation means an increased need to accurately track cash flow, as fuel still remains the highest cost. Inventory control is also a risk if companies still use manual methods such as spreadsheets because of their lack of visibility and control.
Procurement is Essential in Eliminating Financial Risk
As companies are working to plan for the supply and demand shift for the year-end, it is imperative that procurement and finance work together to eliminate any risk involved in the decisions. According to Jeffrey Laborde, CFO of Jaggaer, mitigating risk during the pandemic begins with better managing supply chains, cutting costs, and mitigating contractual, operational and financial risks. Prioritizing cash flow management and accurate financial reporting is more important than ever with the increase in distribution.
The CDC claims that 2 million doses of Vaccine A could be ready for distribution by October, while Vaccine B would have one million doses ready by then. This new supply chain could allow distribution chains to shift their focus, but they also need to be prepared for strict regulations when transporting a controlled substance that requires refrigeration and possible expansion of cube capacity. Financial risk also comes into question, as companies will need to have strict guidelines in place to track inventory control.
If companies are still utilizing manual approaches for their inventory tracking, cash flow management, and reconciling fuel costs, automating and streamlining these tasks will be essential in mitigating potential risk going into 2021.
Why Organizations Must Evolve Beyond Spreadsheets
Many companies today are still tracking the vast majority of their tasks, inventory, reconciliations, and transactions in spreadsheets. Spreadsheets have been primarily utilized as the financial close tool since the 1980s, however, transportation and logistics companies will need to consider alternative approaches as the season increases their demand.
Studies have shown that as many as 88% of spreadsheets are materially incorrect. With the increase in demand expected from October through December, inventory and cash flow tracking will be at a greater risk for errors if companies are still using manual methods such as spreadsheets. With this growth, manual processes simply cannot handle the influx, especially if credit card transactions are involved. The lack of scalability, risk of human error, and overall inefficiency remain critical issues with spreadsheets. Automating, streamlining, and centralizing your processes with financial close automation is imperative.
The Adra Suite of Solutions is an integrated end-to-end financial close automation solution with the capabilities to solve cashflow and task tracking challenges. Take a sophisticated approach to tracking tasks and inventory with Adra Task Manager’s checklist capabilities. Utilize the power of automation with Adra Matcher and Adra Balancer to assist with reconciling fuel costs and eliminating human error. Adra Analytics can track your data period over period, so you are able to see bottlenecks and potential write-off risk before the start of 2021.
With the shift in supply and demand during the last part of 2020, manual processes can only take you so far. Adra can step in and provide the financial automation your organization needs to be ready for every opportunity.
Written by: Courtney Cook