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Embedded finance: the benefits for businesses

If you’ve ordered food or a coffee with your phone or booked a taxi via an app, you’ve used embedded finance. Many of us use it every day, without even realising it. It’s transformed the way we pay as consumers. But many companies still haven’t integrated financial solutions into their own business infrastructure despite the fact that embedded finance offers a number of benefits – some more obvious than others.

An example of embedded finance
There are many kinds of embedded finance. One type, which more and more businesses are benefitting from, is spend management automation. Historically, businesses have relied on manual admin and disconnected processes to manage their expenses and accounts. This could mean using paper expense forms to reimburse employees who have paid for travel or training out of pocket, then using custom spreadsheets to manage cash flow and reconcile expenses at month-end.
Automating these workflows allows organisations to manage everything from purchase requests to accounting in one system. This might involve giving employees company cards and capturing information, like receipts or VAT, via an app. Finance teams then use a web console to approve requests, view the purchases that have been made, and manage budgets. Many spend management systems work with accounting software, so generating and exporting spend reports for reconciliation is much less labour intensive.

Easier and quicker spend processes
Embedded finance has many benefits for businesses. The most obvious are the time, effort, and money it can save teamsA recent study conducted for Soldo by Coleman Parkes Research shows that each year about 2% of company revenue is lost on poor business spending controls, and 30 hours per employee is lost on inefficient manual processes. Embedded finance can do much to avoid this. For example, using company cards and an app instead of expense forms and petty cash is quicker and easier for users. Not only does this save time and effort on a day-to-day basis, it also gets rid of the month-end bottleneck that can tie up finance teams. 
Using multiple systems that don’t work together can mean teams need to manually transfer spend data. This wastes time, increases the risk of error, and leaves data siloed. Using one system gives teams full visibility over every kind of spend, so they can budget and plan more effectively. And with company and employee spend in one place, they get a better view of cash flow and profit. 
As economic uncertainty continues, flexibility is key. Businesses can’t afford to have employees wasting time waiting for equipment to be signed off, tracking down a shared corporate card, or logged out of systems when subscriptions lapse. Instead, spend management automation gives them the agility they need to work at pace. 

Automating for faster scaling
While some benefits of embedding finance are more obvious, others are less expected. For example, the positive effect that spend management automation has on an organisation’s ability to scale. When businesses rely on manual processes, employees waste time waiting for the equipment, software, and training. This slows works down and delays projects – something that no business can afford.
Automating spend management, in comparison, allows teams to request, approve, purchase, and log spend information all in one easy system. This not only means there’s one source of truth, it also means that source is more accurate, as manual data entry errors are eliminated. Richer, more reliable data means more reliable forecasting. Teams are better able to spot trends, make the most of opportunities, and spot problems early. All of this helps them make better decisions, create better strategies, and scale faster.

The impact in finance roles and the finance function
While some may worry that introducing new technologies will replace finance jobs altogether, it actually shifts roles away from data handling to more engaging reporting and planning. When teams are released from repetitive admin, they can use their time to focus on tasks that add more value. This fundamental shift also leads to a transformation within the finance function. Instead of only having capacity for a basic accountancy role, they’d freed up to develop strategy, influence change, and focus on the future. Rather than working in isolation, they can work more collaboratively with other functions in their organisations.
As the role of the finance function changes, so too does the role of the CFO. Rather than focusing on past performance, their attention shifts to the future. And with richer insights available in real-time, they can take on a more influential role within the C-suite, dedicated to strategic decision making and thought leadership. As the roles within their finance team develop, the CFO becomes a leader of a highly skilled team. Succession planning becomes a key part of their new role, along with developing the best of their talent, fostering collaboration across teams, and encouraging innovation.

The changing office experience
When monotonous manual processes are removed, day-to-day finance tasks become more engaging and rewarding. This also frees up time for personal development. Individuals finally have space in their calendar for mentoring, training courses, job-shadowing and more stretching responsibilities. All of which helps employees feel more rewarded, giving them more incentive to stay with their current employers. With greater demand for fulfilling roles in the wake of the COVID-19 pandemic, this makes spend management automation an important tool for businesses looking to weather The Great Resignation.
With skilled workers in high-demand, a good work-like balance, a focus on wellbeing, and clear business purpose are more important than ever before. Expecting long working hours, offering only repetitive tasks, asking employees to navigate complex practices, and requiring individuals to pay for their own expenses out of pocket, are all likely to frustrate new and existing talent. If the everyday office processes are frustrating, it won’t be long before employees look for roles elsewhere. Instead, creating a seamless experience is an important way to attract and retain the brightest people.

Automating for the future
Some of the advantages of embedded finance, which includes spend management automation, are more obvious that others. With quicker and easier processes, for example, it’s clear how businesses could save money, time, and effort. When teams have more visibility and control over their spend, they can better manage cashflow, boost profits, and forecast more effectively. However, this also leads to some less-expected benefits too. When manual admin is removed, finance teams are free to focus on more rewarding tasks in a more fulfilling office environment. In turn, this means they can take on a more central, strategic role within their organisation. All of which helps businesses scale faster and attract and retain the very best people – which are essential as we look ahead to continued economic uncertainty.