Mitigating The Top Challenges Faced by Smaller Businesses
Those of us who also work with smaller businesses understand they face a unique set of obstacles. There is a good recent article in Investopedia which highlighted the top competitive disadvantages, it discussed five key areas that are working against smaller companies and must be overcome to become successful:
- Raising Capital
- Purchasing Power
- Talent Gap
- Name Recognition
In tackling these challenges, do not make the mistake of trying to fix them all, as most smaller businesses simply do not have the resource to accomplish all at the same time. It is best to prioritize them, start with those with the largest impact, fastest results, and easiest to implement.
We believe the top candidate is in improving your cashflow and liquidity, which are paramount for smaller businesses. You can initiate a set of limited, quick, and simple activities to mitigate some of these challenges within your cash management operation.
- Start with Efficiency – Labor accounts for over 62% of the operation cost in Invoice Processing, it is also the root cause for much of the errors and frauds. By minimizing human intervention through automation, you can cut your cost by 90%, and most importantly – removing labor resource-imposed bottlenecks in your peak seasons. Invoice can be processed and issued on-time regardless of volume variations, you no longer have to staff based on the peak season, and just to have them idle on slow days. This removes the efficiency gap in cash management inherent to smaller companies and allowing you to better compete with others.
- Eliminate Talent Gap – Employee turnover and hiring creates a particularly difficult challenge to smaller businesses for several reasons:
- Tasks are often performed by a small number, or in some cases, one individual. So any turnover, or temporary staffing gaps, can be keenly felt across the entire company.
- We rarely see knowledge management system, or formal training, in place for most roles. Often, knowledge and best practice stays with the employee, when they leave, the prized optimization achieved throughout their employment goes with them. You are left with restarting from square 2, or worse, square 1. AP/AR is an external facing function, your customers and suppliers will see every disruption and billing error, it can do great damage to your reputation, brand recognition, and customer loyalty. All these damages are easily avoidable, there is no reason for non-action.
- With today’s low unemployment and competition for skilled talents from other employers, you face two choices:
- Raise wages and benefits to retain talent – both drive up your cost and escalate the wage spiral.
- Accept frequent talent drain as a norm – this is often a losing strategy. You will never get ahead of the pack to become successful, especially when you are dealing with skilled resource.
Human is great for creative tasks, no matter what people say about artificial intelligence, at least for now, human innovates better than any technology or machine. However, in invoice processing, there is little room for creativity, much of tasks are repetitive and codified. Therefore, we believe there is a third option for dealing with the talent gap challenge – by automating the process. The knowledge and skills are now kept within the automation, it becomes an asset which cannot be lured away by higher pay or better benefits, you can dramatically reduce your talent gap headache. Your invoice processing and billing will always be consistent, accurate, and timely. It improves your #5 challenge – name recognition, by increasing customer/supplier satisfaction and cultivating loyalty.
These initiatives ultimately benefit key financial metrics such as reducing Days-Sales-Outstanding, optimizing Days-Payable-Outstanding, and reduces your Cash-Conversion-Cycle. In conjunction with a stronger cashflow statement, they will improve your #1 challenge – Ability to raise new capital regardless of the funding channel.
In Juno Payments, we are eager to work with you and start this journey. We provide an invoice processing automation solution that delivers all the benefits we discussed above. It is a cloud-based pay-for-what-you-use platform, there is no hardware to buy or software to maintain. You can easily start a small pilot to experience the benefits and grow your usage if you like what you see. It allows you to reap the benefits while preserving your precious capital.
We hope this article resonates with you. Please visit the key information links below and we would appreciate an opportunity to sharing more and design a solution that is right for you.