Accounts Payable News^®

With year-end optimism slowly ebbing away as we move towards spring, many in AP departments are still finding that they have to do more with less. And it’s not going to get any better any time soon. The words “the recessions over” draw to mind images of George Bush and his misplaced 2003 “mission accomplished” speech. Yes, the economy may be on the road to recovery – but there’s going to be an awful lot of debris along the way before we get there.

With no political party likely to tell it how it really is until after the election, we probably won’t be able to assess the situation properly until sometime in July. However, we can predict with some certainty that the area most likely to be hit is taxes.

With unprecedented levels of debt, it seems likely that VAT will rise to 20pc and that basic rate tax will increase by 2p to 5p in the pound to try to combat it. However, opinion is divided about the forecast on interest rates.

The London School of economics say that interest rates will have to rise at some point, but fear that the Bank of England might try to keep them nrealistically low for too long – triggering an inflation crisis. However, Vicky Redwood of Capital Economics, said that rises in interest rates looked unlikely - meaning that; “mortgage costs should stay low. But house prices still look overvalued and could start to fall again, leaving households in negative equity,” she continued.

So what does this all mean for us? Those of us lucky enough to still be in employment are likely to see our standard of living stay the same, or dip as our salaries have to stretch further. In addition, employers are unlikely to put an emphasis on growth while the recovery is still sluggish, so AP departments can expect to have to work harder for the same, or possibly less, pay.

And what does it mean for the organisations that we work for? Well, I think the policy for the next year is likely to be a continuation of the plan for the previous year – ie consolidation, a keen eye on bottom line profit and loss accounts, and investment in automation technology where possible. Some organisations may continue with their exploration into the benefits of outsourcing. However, unless you get it right and obtain the buy-in from key staff – outsourcing can be difficult to implement, and any cost savings buried in red-tape.

So with the recovery still so hit and miss, and with opinion divided on how 2010 will pan out, the economic nervousness should make those in control of their organisation’s finances proceed with caution.