June 27, 2023
Efficiency At Scale: Unlock Top-line Growth While Optimizing Costs
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Stay informed with the latest trends and best practices in finance and procurement.
June 27, 2023
Stay informed with the latest trends and best practices in finance and procurement.
It’s the holy grail of lean business scaling: explosive growth, while simultaneously reducing operating costs.
Even just ensuring that costs are controlled and that they grow at a rate significantly below top-line growth, is a worthy goal – one that leads to sustainable, long-term success.
Some may say it’s impossible. Others understand it’s not only attainable in theory, but has been achieved in practice by leading businesses who understand the fundamentals of lean growth, and particularly of cost control and optimization.
A recent Harvard Business Review piece investigates how to create a “growth-oriented, cost-effective organization.” The authors studied 1,500 of the world’s largest global public companies, identifying businesses that achieved impressive growth, while simultaneously cutting costs.
They identified five critical steps to achieve this feat:
Instead of costs sitting in protected “silos,” business leaders should approach costs as investments, and identify and prioritize such investments that are key to driving growth.
The IKEA example drives this point home: the company uniquely connects strategy and execution by directly linking its costs in terms of design and manufacturing, to its business growth goals. As the company famously advocates, “We do our part. You do your part. Together we save money.”
Sometimes, incremental changes aren’t enough to move the needle. The authors recommend imagining a new competitor approaching your market: what would they keep? What would they remove? How would they simplify their offering to unlock more value?
This includes internal costs that can be difficult to quantify and therefore slip under the radar. Recently, the Wall Street Journal reported on Shopify’s announcement of "a temporary purge of some kinds of meetings." This purge resulted in 12,000 events being deleted from employees’ calendars, freeing up a jaw-dropping ninety-five thousand hours.
All too often, large, drawn-out technology programs don’t offer the short- to medium-term value creation that executives require.
The answer can be rapid technology sprints, that can be used to automate specific areas of the business for a high-impact, low-effort, cost-saving opportunity.
A classic example is the procurement-to-accounts-payable cycle. Smart organizations are using purpose-built procurement Saas solutions to immediately extract value from this process.
Focus on your strengths, and outsource non-core, non-differentiating capabilities. Apple did this in the early 2000s, and can now offer more value to consumers by doubling down on design while partnering with the likes of Foxconn for the manufacture of its devices.
While this strategy is not without its risks and critics, it demonstrates how focusing on your strengths can ensure a sustainable competitive advantage.
“Smart companies don’t think of cost-cutting as a one-time reaction to a slowing economy; they believe it’s a primary duty of managers to remain constantly vigilant about costs,” said the Harvard Business Review authors.
Ensuring that managers are empowered with the right technology is key: for example, by implementing PayEm’s solution for finance and procurement teams, organizations can drive business growth while simultaneously achieving complete transparency and control over expenses – at the employee, department, vendor, and subsidiary levels, and on all payroll expenses including all corporate payment methods.
There are numerous examples of companies outside of the Fortune 500 that have managed to achieve exceptional growth while reining in expenses.
Swimm is an innovative, fast-growing company that helps engineering and developer teams create, find, and maintain documentation coupled with code.
The company found itself in hyper-growth mode but found it challenging to achieve visibility and control when it came to expenses.
By implementing the PayEm solution, the Swimm team could now achieve total control and visibility over company spend, enabling employees to focus on their role in driving growth and continue to fuel incredible expansion without compromising on operating efficiency.
In a recent PwC survey, 42% of business leaders were prioritizing cost cutting in addition to potentially reducing headcount. This is clearly a priority for business leaders today, although how to achieve this – and particularly where to start – can be a challenge.
Management guru Peter Drucker famously said, “You can't manage what you can't measure.” It starts with regaining control and visibility over the complete procurement and payment cycle and quickly manifests in increased efficiency, savings, and growth.
With PayEm you can immediately modernize your accounts payable process, and gain complete control over spend; from setting rules and limits to seamless international payments, ensuring you stay on track and within budget.
It also enables complete visibility between the various stakeholders in the organization, not just the finance team – allowing significant time savings, preventing confusion, and improving alignment within the company.
To learn more about driving growth while reducing costs, set up a call with a product expert today.
