Real-Time Insight on Costs Gives Corporates Better Line on Financial Health

Inflation runs rampant. Macro pressures abound.

There’s no time like the present for companies — regardless of size and regardless of vertical — to take stock of their financial health.

The urgency is there, having come through what is arguably the worst of the pandemic, but faced with new challenges — even as they’ve shifted to all manner of new operating models, including hybrid or work from home — companies must re-examine what’s working and what’s not.

It may be the case that all kinds of external factors are beyond executives’ control, but the best way to survive, thrive and keep margins intact is to examine operating costs — both historical costs and ones that might be on the horizon.

Cost-benefit analysis is critical, said Laura Hendrix, solutions consultant at Airbase. She told PYMNTS that while many executives might focus on top-line momentum, it’s imperative to see the “true cost” associated with supporting the various and sometimes far-flung components of their organizations.

“This could be related to anything from specific projects to services or departments to individual product lines, and it can include any number of dimensions of measurement,” she said.

See also: More Control, Better Visibility Boost Biz Spend Management Outcomes

Examining the Realities

Examining just what it takes to get some of these activities going — or what it costs to sustain them — helps executives make better strategic decisions about their markets and their opportunities, chiefly through cost benefit analysis.

“You’ll want to be able the find the best path forward to achieve your company goals,” Hendrix said, while fine-tuning budget spend or readjusting priorities. A better handle on historical costs and trends gives insight into how to craft projections and find new efficiencies.

High-powered software can help collect the data necessary to move toward cost transparency — and can help decide which inputs are the most worthwhile for examination and analysis by accounting teams and other departments, she said.

“Prioritizing and strategizing the data points that you want to focus on, and then finding a software product that really allows for you to tag those items appropriately, can allow for real-time consumption of that data,” Hendrix said.

Read more: CFOs Double Down on Model Testing, Cost Controls Amid Choppy Economy

Real-time analysis and insight is far more useful than waiting till the end of the week, month or quarter to determine whether a strategic pivot is necessary, she said.

In terms of mechanics, the reporting tools, such as those on offer from Airbase, focused on spend management and tied to the software can show trends in a visual format that show ebbs and flows over long or short time frames. The data presentation is customizable depending on who needs to have access to and digest the information.

Looking ahead, she said that cost transparency is an area that has, for many firms, room for improvement.

“In this macro environment, these companies are going to need to take that data and do more with it,” Hendrix said.