Five strategic financial controller tips to keep inflation under control in 2024

Five key strategies to help you stay on top of inflation as a financial controller

Expense management software — and ERP integrations — can help companies fight inflation by offering real-time financial analytics, automated reports, cost-centre analysis, and more. These reporting benefits help finance teams spot market threats faster and boost efficiency.

Automating financial processes also makes organisations less vulnerable to inflation risk by improving efficiency. As a financial controller, this software can help you promptly identify and manage inflation risks, rework strategy, and prepare your company for the future.

Strategic tip 1: Keep track of the following economic indicators

As a company, your direct influence on global inflation is pretty small. But you can use certain measures internally to tackle the effects of inflation. Start by keeping an eye on the overall inflation rate in the market to guide your decisions within the company.

The central bank of every country or monetary union (such as the Bank of England or Federal Reserve) periodically presents inflation figures. They talk about what inflation has been doing and where it might go next. Keeping an eye on these figures helps you know what big financial institutions expect from inflation and how you can take action within your strategy to mitigate any fallout.

For example, if commodity inflation increases by 20%, you can adjust your prices for customers or suppliers to offset some of that increase by increasing your products' prices.

Strategic tip 2: Make regular financial analyses

As a financial controller, you know that one of the most important parts of your job is to make regular economic analyses to determine the impact of different inflation rates on the margins and ratios within your company.

Analysing multiple scenarios makes you less likely to encounter nasty surprises and can prepare you for the future. To thoroughly analyse, you need real-time expense data with the ability to sort through that data quickly. Spend management solutions, like Payhawk, can help you with this by ensuring you get complete spend control and visibility over the costs incurred within your company.

One application of this is our in-house OCR technology for scanning and posting invoices. Our in-house OCR technology scans and posts all receipts and invoices efficiently. Using an AI-powered camera, it captures the data from all invoice types and auto-fills them into your accounting software via integrations. The benefit? No typing out data entry, sorting through paper receipts, or human entry errors.

Take Payhawk customer GDS Group, for example. Howard Thompson, Global Financial Controller at GDS Group, explains:

"Before we used Payhawk, we had to do everything very manually using Excel spreadsheets," "Somebody would send in their physical receipts in an envelope attached with a printout of a spreadsheet, leave that on their manager's desks, and then get that signed off before sharing with finance."

Strategic tip 3: Marry finance with other departments within your company

Your finance and procurement processes will increase in complexity as your company grows. It may be that your finance team splits out into finance and procurement, and you'll be responsible for the financial numbers. Procurement will be responsible for supplier management and purchasing materials or third-party services, or you may already have a similar set-up and be adding more heads.

Either way, by working closely with other departments within your company, you can better manage inflation risks across multiple departments. For instance, advising the purchasing department to secure long-term contracts can help them get better deals and avoid sudden price hikes that could affect your purchases. And then accurately monitoring the actual purchase price for your materials and services in your purchase order system.

In addition, by staying in touch with the sales and marketing departments as financial controller, you can get an idea of the price sensitivity of your company's customers. And, if you have to raise prices due to persistent inflation, you can.

Only by working together can you devise the proper pricing and promotional strategy to ensure the company's profitability — this is the philosophy we follow at Payhawk. By communicating with stakeholders effectively, you know exactly what is going on and can act proactively and make the right strategic decisions in times of crisis.

Strategic tip 4: Prioritise cost efficiency across the entire organisation

In times of ongoing high inflation, staying competitive and designing your company's production process as efficiently as possible is increasingly important. If you can improve the efficiency of the production process within your organisation, you can generate the same output with less input. This immediately makes you less susceptible to cost increases caused by inflation.

You can achieve the above in part by standardising company processes. The ideal scenario is for everyone to be on the same page regarding core KPIs & metrics. Then, you can get more reliable data presented in the same way, which will help you report it efficiently and provide actionable insights.

In many companies, the balance sheet is drawn up at month-end. And if your organisation works with investors, this is nothing new. By making the month-end closing process as quick and smooth as possible, you'll have plenty of time to pick up on things that matter, such as analysing costs and the production process.

Two big ways to improve the month-end close? One, by using corporate cards to manage and control a lot of your business spend easily. If you use Payhawk, for example, our company cards and expense management software would mean no more chasing receipts and invoices at month end and even a 2x faster close (leaving you time to analyse and identify opportunities and threats). And two, by using a spend management solution with direct accounting software and ERP integrations, to make reconciliation a breeze.

Carolina Einarsson, FD, at Essentia Analytics, describes:

"We can now close our month in five days instead of ten. Using Payhawk has been a game changer; we've even been able to allocate resources to revenue-impacting teams directly. We have an employee in the finance team who now spends half of her time working as an SDR."

Strategic tip 5: Manage currency risks effectively and avoid single-thread risk

Operating globally means handling different currencies, and inflation can impact exchange rates, creating both chances and risks. Make plans to shield your company from sudden currency changes caused by inflation.
If your company has branches in various countries, you already deal with multiple currencies internally. Inflation affects your finances within the company. To manage this, make sure you gather information from all branches into one clear view.

With our multi-entity management software, you can streamline workflows between multiple entities. These features include a Group Dashboard, which allows you to see the expenses and cash position of all entities within your organisation at a glance.

You can create a Payhawk account for all the entities within your organisation, solving the hassle of intercompany loans and transactions in one fell swoop, saving you a lot of time and effort.

Serkan Yüksel, Lead Digital Transformation Finance at Hypoport SE, says the following about the Group Dashboard:

"With the Payhawk Group Dashboard, we can monitor expenses at the group level even faster and more flexibly. We can now manage liquidity planning more efficiently and accurately through the dashboard and take better control by segmenting data by subsidiaries, teams, and cost types."

With turbulent economic times and inflation set to continue into 2024, 2025, and beyond, companies must be mindful of mitigating single-thread risk. Take the 2023 collapse of SVB banks, for example; although it fortunately didn't end terribly for those companies banking with SVB — it could have. As a financial controller, you must work with your CFO to ensure you don't put all your "financial eggs in one basket". Make sure you have different lines of credit and lending in case of bank collapses or similar.

Stay on top of all the developments - both inside and outside your organisation

Now you know five of the most critical ways to identify and manage inflation risks, you can begin to strategise further how you might future-proof your organisation in your role as financial controller.

• By keeping an eye on economic indicators, you know how central banks and statistics offices think about inflation, and you know roughly what is coming up in terms of inflation. In addition, you can identify opportunities and threats related to inflation within your organisation in various ways to take advantage of them or quell them
• By being in close contact with the other departments within your organisation and regularly making financial analyses, you and the rest of the organisation can devise a sound strategy for dealing with inflation
• By organising processes as efficiently as possible and thinking carefully about the impact of inflation on the exchange rate, you can minimise the effect of inflation on your organisation's cash position and financial results

Want to learn more about how Payhawk can help you manage inflation?

Using the right software makes managing inflation risks more efficient. For example, by implementing the right spend management software to speed up multiple administrative processes with automation and get access to real-time data that you can use to make your analysis.

How can Payhawk help your company manage specific inflation risks? Book a demo to find out more.