Ardent Partners’ 15th annual state of procurement study completed earlier this year found that the Chief Procurement Officer’s top priorities in 2020 have shifted dramatically, largely as a result of the coronavirus pandemic and its impact on business (note that while the US economy technically entered a recession in February, the global recession that is now also impacting the EU and many other developed regions only initiated after the global shutdown).
As we entered this new year and decade, many Chief Procurement Officers and their teams were riding high, focused on digital transformation, improving processes, and increasing agility. Yet, in an instant, CPOs and procurement leaders around the world are now facing an entirely new set of pressures, accelerated by a global pandemic that has disrupted an interconnected business world and its supply chain. Ninety percent of CPOs state that the impact of their department on the overall enterprise has consistently risen over the last three years. Perhaps now, more than ever, it is critical for this trend to continue. To ensure that it does, CPOs must align their resources with the most important enterprise initiatives.
The pandemic has also created a new “hierarchy of needs” for CFOs who, by and large, have placed a laser focus on business continuity and the liquidity needed to fund ongoing operations. This is to be expected since businesses revert to their more basic instincts in times of great stress and pervasive uncertainty. For procurement, this means that impacting cash has become the new top priority today and that driving more savings will become much more important in the second half of 2020. It also means that procurement teams will be reevaluating their suppliers and significantly increasing their sourcing activity now and well into 2021.
While procurement has multiple levers it can pull to impact cash, including driving cost reductions and savings, enabling process efficiencies, managing demand, renegotiating payment terms, and ensuring contract compliance among others, one area that deserves serious consideration is tax automation. Solutions that automate the tax payment process, like those delivered by Vertex Inc., can directly impact cash by enabling greater accuracy in the disbursement of vendor payments while also ensuring compliance, and powering efficiencies.
An intense focus on cash management means that the impact of tax overpayments and other mistakes as well as any associated penalties and/or fines have more severe consequences on the buying organization. These cash issues can be mitigated through the use of tax automation. Additionally, increased sourcing volumes will mean, in most circumstances, engaging with and, ultimately, contracting with suppliers that are operating in new and different tax jurisdictions. The ability to understand tax implications before a contract is awarded can influence final decisions and impact the bottom line, while automating the post-contract tax payment process can reduce the time, cost, and effort required to ensure tax payment accuracy and avoid unnecessary costs.
As enterprises navigate these tough times, it is incumbent upon procurement leaders to maintain their alignment with the CFO (and other executives) and leave no stone unturned in support of key objectives. When it comes to impacting cash management in 2020 and beyond, tax automation should be a considered option.
RELATED RESEARCH
REGISTER New Webinar Aug. 18 –> Smart Strategies for Tough Times
Data Mining and Data Scientists in AP? YES!
What Causes Invoice Exceptions?
Metrics that Matter in 2020 – Top CPO Pressures
