While there may be light at the end of the tunnel, the retail sector is struggling to secure profitability in these uncertain times. Brands big and small are suffering. UK high street retailer, Fenwick, recently announced a pre-tax loss of £111.9 million (€132.63 million) amid “most difficult trading conditions in living memory”. Earlier this year, online retailer and department store John Lewis revealed an eye-watering loss of £517m (€612.76 m) for the 12 months ended 30 January 2021, says Mark Turner, managing director of business process services, Liberata.
Continued staff shortages due to the need to self-isolate, coupled with a high staff churn as many sought to seek careers in alternative industries have exacerbated the recruitment problems already brought on by Brexit. Many retailers have felt the brunt of the problem. Fashion retailer Seasalt, for example, was forced in July to close several of its shops due to workers being pinged by the UK National Health Service (NHS) Test and Trace app.
At the same time, back-office complications have multiplied in relation to finance, accounting, invoices, suppliers and payroll. This has created backlogs, high workloads and inefficiencies within retailers’ admin-heavy processes developed in a pre-digital era. With the festive period just around the corner, this backlog is only likely to get worse.
After all, in the run-up to Christmas the average household spends on average almost £740 (€877.06) more in December, 29% more than in a typical month. Therefore, invoice processing, supplier set up, supplier statement reconciliation, billing, new customer set up and credit control are all likely to be stretched over the coming months. But will retailers be celebrating this festive season?
Taking the pressure off
The efficiency of back-office functions has always been critical to minimising retail store disruption. It is the archetypal duck paddling feverishly underwater. With margins growing ever tighter and consumer demand waning, now is the time for retailers to rethink their current processes and look to achieve greater efficiencies in the back-office. A fundamental part of this will be shifting from traditional manual operations to an automated, outsourced back-office approach, which will provide benefits across the entire organisation.
Faced with a depleted workforce and unprecedented uncertainty, back-office retail workers are being placed under significant pressure to juggle a variety of essential administrative tasks. This leads to time-poor teams being prone to mistakes that impact the bottom line. With research from the Accounts Payable Association finding that 63% of finance professionals have received duplicated invoices, of which 33% had actually paid them, it is clear that mistakes in this area can be frequent, and costly.
The use of innovative, digitised solutions to automate processes allows retailers to streamline back-office administrative tasks, helping to take the pressure off employees and ease their general wellbeing. In the scenario above, technology can be used to identify duplicate payments and previously unidentified credits; ensuring retailers don’t miss out on recoverable funds.
Automating the bulk of this process will help to drastically reduce the burden on in-house teams and enable staff to focus on validating and recovering funds. Plus, by reducing the time taken up by such tasks, enables employees to have more time to concentrate on the bigger picture initiatives that often fall by the wayside during busy periods.
A shot in the arm
Staff shortages are not only leading to inaccuracies but a general backlog of tasks, particularly in the accounts payable and accounts receivable functions. Not what is wanted at a time when cashflow is king. Luckily, automation technology can be the shot in the arm needed by retailers to allow them to catch up.
In addition to deploying technology, retailers may want to consider outsourcing to finance and accounting staff who can work as an extension of their in-house back-office function. By outsourcing everything from invoicing to managing payroll, managers can be freed from the administrative complexities these tasks often entail.
External teams can be used to complete supplier statement reconciliations on behalf of the retailer. Improving cashflow and productivity. This often provides a more cost-effective option than employing temporary staff to fill the gaps. As well as assisting in clearing the backlog, it can be a valuable opportunity to get expert external insight into the current processes and solutions in use within the organisation.
This can help management to identify the root cause of any issues they are experiencing and find practical ways to improve them in order to prevent future issues and streamline processes. However, many make the mistake of treating external teams as outsiders. It is important that retailers treat them as an extension of their existing in-house teams, working closely with them to clarify objectives and priorities.
Every penny counts
While the discussion around the retail sector tends to focus on the shop floor and those working within that environment, it is evident that those in the back office are also coming under immense pressure. With the effects of the pandemic and Brexit still being felt by retailers across the country, it is imperative that they begin to ease the burden being placed on back-office staff before they lose them forever. By eliminating the administrative backlog, teams are able to concentrate on more strategic tasks, monthly close, reporting and analysis to lead to a more stable future.
Vital to this will be outsourcing certain repetitive processes and deploying solutions that help to automate and digitise everyday back-office and administration tasks. This will provide tech-driven efficiency that would otherwise be unattainable at a time where every penny saved counts. By doing so, retailers will be in a better position to navigate future administrative complexities and overcome issues arising around staff shortages.
All the while, increasing accuracy and empowering teams to be able to focus on more value-adding and bigger picture tasks. This will lead to a reduction in costs, improved efficiency, improved quality, enhanced supplier relationships and, ultimately, improved customer satisfaction. Importantly, this step-change will help to improve the wellbeing and satisfaction of those working in the back-office and lead to significant cost-savings, setting retailers up for an increase in sales in the future.
The author is Mark Turner, managing director of business process services, Liberata.
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