By Daniel Hunter
UK companies have greater concerns over how currency volatility will impact their business than the rest of the world, according to the results of the annual Global E-Invoicing Study from Basware.
The research by theleading provider of e-invoicing and purchase-to-pay solutions revealed that a third of UK businesses stated that better managing currency volatility was a key priority for the next 12 months, compared to a global average of nine per cent.
The second annual global study, which surveyed 908 finance professionals from the US, UK, Sweden, Norway, Germany and Finland, was conducted by Basware and the Institute of Financial Operations(IFO). The 2012 Global E-Invoicing Study is a benchmark report of the e-invoicing practices and financial objectives of businesses of all sizes in key global markets.
Other European regions in particular did not deem management of currency volatility to be a key priority for theyear ahead. 4 per cent of Swedish and Norwegian companies selected it as a focus accompanied by 2 per cent of Finnish businesses. The United States and Germany were marginally higher but still did not rate currency fluctuations as a central issue with only 6 per cent naming it a priority.
Andrew Jesse, VP, Basware UK commented: “As governments struggle to spur on economic growth and markets remain precariously balanced, currency volatility can present significant challenges to UK, especially given its levels of overseas trade and position as a hub of international business. The implementation of austerity measures, changing economic ratings and the continuing struggle to conclude bailout discussions all result in a level of currency volatility that can bring about considerable difficulties in payment and contract resolution.
"However, many businesses are looking to technology to increase speed, control and efficiency in the face of this volatility. In this research, the vast majority of businesses saw e-invoicing as a tool that can help them manage and mitigate currency volatility. Transparency and rapid processing is of paramount importance when dealing with currency in flux and if constrained by paper an already complex invoicing and payment process becomes mired in an added layer of confusion.”
In the research, UK businesses identified optimising cash flow and working capital management as the most important target for the year ahead with two thirds (69 per cent) of those surveyed selecting it as a key priority. This was significantly higher thanother participants, with a global average of 49 per cent choosing this as an important focus for the next year. The need to improve operational efficiency was a close second for UK companies, chosen by 65 per cent of respondents.
Whilst currency fears were greater for the UK than the rest of the world, 73 per cent of UK respondents agreed that e-invoicing would help improve management of currency changes and conversion. E-Invoicing and automation were found to have a significant impact on helping companies achieve their financial objectives. One in five respondents who already use e-invoicing said that they experienced less uncertainty around cash flow and a quarter said that it improved liquidity and working capital management. Furthermore, nearly all respondents (93 per cent) agreed that e-invoicing could help improve cash flow and working capital management, whilst 94 per cent agreed that it would help increase operational efficiency.
Improving relationships with suppliers was also a key goal for UK respondents with over half stating that they would be looking to improve supplier and customer relationships. This is instark contrast to results found in Basware’s 2011 research project where almost half (45 per cent) of UK financial heads said that they were likely to extend payment terms to suppliers in 2012. In the most recent study, the vast majority of businesses surveyed (89 per cent) stated that e-invoicing would help businesses to achieve goals over improving supplier relationships with just under half (46 per cent) saying it would have a large impact.
The research also showed that after years of neglect in the name of cost savings, green priorities have begun to make their way back onto the financial agenda. Just under half of UK companies (44 per cent) stated that improving environmental practices, such as green sourcing or paperless processes, were a priority for 2013.
The priorities for UK businesses in descending order of importance are:
· Optimising cash flow and working capital management (69 per cent)
· Improving operational efficiency (65 per cent)
· Improving relationships with suppliers/customers (54 per cent)
· Increasing profits and top line performance (53 per cent)
· Improving environmental practices (e.g. green sourcing/paperless office) (44 per cent) AND Reducing overall purchasing cost (44 per cent)
· Improving forecasting and planning ability (43 per cent)
· Improving auditing and compliance (34 per cent) AND Better managing currency volatility (34%)
· Don't know (3 per cent)
· Other (1 per cent)