How AP Transformation Can Ease Your COVID-19 'Cash Crunch'

Posted by Greg Bartels on May 19, 2020 5:04:17 PM
Greg Bartels

COVID-19 is tightening its grip on the cash flow of businesses.

AP transformation can ease cash crunch

  • 63 percent of businesses have been forced to cut costs because of COVID-19
  • 44 percent of businesses or more say their sales or profits have been negatively impacted
  • 33 percent of businesses have been forced to reduce investments because of COVID-19

This is according to the results of polling questions conducted during a recent Institute of Finance and Management (IOFM) virtual town hall meeting on managing working capital during COVID-19.

Businesses in industries such as tourism, hospitality, entertainment, and air travel have been particularly hard hit by COVID-19.  Moreover, commodity-oriented industries, such as oil and gas or metals and mining are exposed from a cash flow perspective as global demand drops and pricing fluctuates.  And businesses with low cash reserves and unstable cash flows find themselves in a precarious cash flow situation.  Even businesses that appear to be on solid financial footing may not be immune to cash flow issues, depending on how long it takes for the economy to rebound.  

It is no wonder that one-third of businesses have experienced cash flow issues, per IOFM.

Businesses are taking measures to ease their cash crunch during the pandemic.

  • 56 percent of businesses are taking advantage of early-payment discount offers
  • 44 percent of businesses are earning cash-back rebates on supplier payments made with cards and/or extending their standard payment terms to suppliers
  • 22 percent of businesses offer supply chain financing to their suppliers
  • 12 percent of businesses dynamically offer early-payment discounts to suppliers


These types of strategies help reduce the possibility of a business using up its cash reserves and credit lines and becoming cash-flow insolvent.  Many small and mid-sized businesses – those without big credit lines from banks – are in real danger of running out of cash if the crisis does not abate soon.

But the most effective strategy for managing working capital during a crisis is to leverage the visibility provided by a cloud-based accounts payable transformation solution.  Aggregating all invoices onto a single platform provides businesses with visibility into their cash and spending.

  • Graphical dashboards display the status of invoices and key cash flow metrics in real-time
  • Archived images of invoices and related data can be instantly retrieved by authorized users
  • Users can drill down into data by supplier, spend category, business unit or other criteria
  • Data can be effortlessly exported for ad hoc reports
  • Current and historical data can be accessed via a mobile device
  • Seamless integration between the cloud-based accounts payable platform and a legacy ERP application provides 360-degree visibility into transactions and supplier relationships

These insights empower a business to take quick action to manage its cash flow and spending.

Unfortunately, many businesses are missing out on the visibility provided by cloud-based solutions.

Only 35 percent of businesses have unified, real-time visibility into working capital information such as early payment discount offers, the percentage supplier payments made electronically or Day’s Payable Outstanding (DPO).  Fewer businesses use predictive analytics to manage their working capital, according to the results of the polls IOFM conducted during its virtual town hall meeting. 

But the cash flow challenges brought about by COVID-19 may be changing things.

Sixteen percent of businesses plan to deploy a solution that provides unified, real-time visibility into working capital before year’s end.  Another 11 percent of businesses plan to deploy a solution that provides unified, real-time visibility into working capital before the end of 2021, IOFM reports. 

Navigating the cash crunch that has resulted from COVID-19 and positioning the business for success during the economic recovery will require the type of visibility a cloud-based accounts payable transformation solution provides.  Improved visibility into cash and spending also will help businesses steer clear of obstacles along the way.  Five percent of businesses surveyed by IOFM fear that bigger cash flow challenges may be on the way, while 35 percent of businesses say they are “cautiously optimistic” about their current cash flow situation – hardly a ringing endorsement.

Do not leave your business at risk of becoming cash-flow insolvent.  Talk to a Business Continuity Specialist to learn how our cloud-based accounts payable transformation solution can help ease your COVID-19 cash crunch. 


Tags: Accounts Payable Processing, Invoice Processing, AP Transformation, Cloud-based Accounts Payable Solution