Resilience & Strategic Value for Midsize Companies Investing in Technology

By Richard Serpa
VP, Mid-Market

Pervasive Challenges

While conversations around the COVID-19 pandemic continue to linger, other impacts from FX volatility along with a strengthening US dollar, trade wars, inflation, supply chain challenges and transitions in staffing levels are creating a wide array of challenges to be tackled by companies today. Based on recent survey data collected by the National Center for the Middle Market (NCMM) at The Ohio State University Fisher College of Business, nearly “40% of middle-market executives felt the pandemic would be “catastrophic” to their businesses.” We know the challenges facing various industries vary, but one thing is true: these are not transitory, limited impacts to a small sector or industry. Recently, Janet Yellen remarked and apologized for mischaracterizing the inflation concerns; ” “There have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that at the time I didn’t fully understand.” However, Midsize companies show signs of resilience beyond what small and large companies display.

Shifting from Conservation to Resilient Confidence

Mid-market, or midsize companies make up a big part of regional and global economies and in many ways, are a bellwether for the health of the economy. SMEs fare better in dealing with some challenges and often post better results than larger MNCs or conglomerates. Even so, SME companies, in 2020 and throughout 2021, took a conservative approach to holding surplus liquidity versus investing it immediately into the business or new initiatives. In fact, a Middle Market Center survey showed that 43% of middle-market leaders would hold cash instead of investing it.” However, these conservative measures may be overkill as SMEs are better equipped to weather economic downturns and adverse conditions than their larger or smaller counterparts. Historical averages for SMEs outpace large business at 3.5% revenue growth and 2.3% employment growth, respectively since 2012. This tells us that midsize companies do have greater levels of resilience and can afford to continue to invest in technology.

Middle Market Companies Sustained Growth Rates Pre- and Mid-pandemic

Middle Market Companies Sustained Growth Rates Pre- and Mid-pandemic

Driving Strategic Value for Midsize Company Investments in Technology

The cash and liquidity available by many midsize companies during the pandemic should now be put to use in strategic technology investment. COVID-19 has illuminated the truth against the false notion that only big companies can find value in treasury technology. Larger corporates were forced to look to technology for automation and enhanced strategic decision-making capabilities across finance and treasury; now, midsize companies should advance their technology investment as digital transformation and improvements are very attainable and easier:

Employee Retention – Short-term employee mindsets translate into high mobility, keeping your best employees longer is a result of automation initiatives; that is the low-hanging fruit of keeping your employees challenged with strategic initiatives.

Business Intelligence – Greater visibility into cash and liquidity and making that visibility real-time, means better decision-making and minimal blind spots into your available resources.

Better Control – Remote workforces, business combinations or M&A create challenges, technology speeds the ERP and system integrations required to ensure controls and visibility are within the sights of the CFO and executive leadership team.

Centralizing Finance Processes – Payments, investments, debt, and accounting entries for all, can be streamlined and automated to minimize effort on the part of treasury and automate reconciliations.

Resilience and Flexibility – Knowledge, from strategic information provided through technology generates decision-making capabilities for resilience and flexible bank connections ensuring the ability to pivot to desired banking partners when conditions shift.

To achieve growth, midsize treasury and finance teams need to have a digital transformation strategy that is inclusive of leading technologies to drive real-time, insightful, strategic decision making. Today’s leading solutions need to provide immediate visibility into cash, automated data analytics, centralized disbursements, while growing and protecting capital with robust cyber security. There are some specific benefits to investment in technology and these are only a sample. For more information, reach out to our Midsize Company team at [email protected] or visit the website to learn more on how our Kyriba for Midsize Companies solutions work for your company.