Stop Cutting, Start Optimizing: Why Finance Teams Need a New Cost Strategy

Finance teams cut an average of $15 million last year. Yet 89% of organizations can’t sustain those reductions beyond three years. If you're still playing the cutting game, you're fighting yesterday’s battle with tomorrow’s tools. 

Today’s finance leaders face a perfect storm, with inflation hovering near 2.4%, 87% of finance and accounting leaders reporting critical talent shortages, and C‑suite pressure for real-time financial insights. The old cost-cutting playbook isn’t broken, but it’s outdated for what today’s finance teams are up against. 

Here's what's different now: The finance teams winning in 2025 have moved beyond traditional cost cutting to strategic optimization. Instead of tactics that deliver short term relief but long-term pain, they're using automation to eliminate waste while freeing their people for value driving work. 

The Problem with Over-Cutting  

The phrase "cut to the bone" exists for a reason. It’s painful, and in business, it can be dangerous. Sure, slashing budgets may trim expenses in the short term, but it often does more harm than good. Gartner reports that only 11% of organizations can sustain cost reductions over a three-year period. And it’s easy to see why. 

Layoffs may temporarily lower payroll, but they also eliminate institutional knowledge. Postponing tech investments might free up capital, but it leaves teams stuck with outdated tools and inefficiencies. And asking lean teams to do more with less eventually leads to burnout and more costly turnover. 

Here’s a common scenario: a finance leader freezes hiring and delays software upgrades to meet budget demands. Six months later, the team is swamped, invoice errors are up, and leadership still isn’t getting accurate reporting on time. 

Cost-cutting often acts as a bandage. What finance leaders need instead is a long-term strategy that aligns spending with value creation. 

That’s where cost optimization comes in. 

What Cost Optimization Looks Like in Practice 

Cost optimization starts with understanding where spend drives the most value and where it creates drag. That means evaluating spend through a value lens. What resources and processes are helping move the business forward? Which ones are draining time and money without delivering results? 

According to Gartner’s 2025 Finance Spend and Headcount Key Metrics report, 74% of finance function spend still goes to personnel. That number isn’t inherently bad, but it does suggest an opportunity: What if some of that headcount could be refocused on more strategic work instead of repetitive, manual tasks? 

This creates the optimal scenario for cost optimization. People are still the most valuable part of the process. Automation just clears the clutter so they can focus on strategic work. This is where automation starts to make a measurable impact. 

The Automation Advantage 

Automation provides the solution to these inefficiencies. It addresses real issues, not just surface-level pain points. Think about all the time your team spends chasing approvals, entering data by hand, or double-checking reports. Now imagine if those hours were redirected toward insights, strategy, and growth instead.  

Automation helps reduce operational costs while maintaining accuracy and control. Think less data entry, fewer delays, and no more paper-chasing. 

McKinsey research shows that automation can reduce indirect costs by 15-20% in just 12 to 18 months. For AP departments in particular, automation can cut invoice processing costs by up to 80% and reduce errors that lead to late payments or duplicate spend. 

Beyond speeding things up, automation helps enforce approval workflows and creates a reliable audit trail for every transaction. It strengthens supplier relationships by ensuring on-time, accurate payments. And it gives finance leaders real-time visibility into liabilities so they can act faster and plan better. 

What Happens When You Don’t Optimize 

With those processes off their plate, finance teams can focus on the kind of work that drives real results like forecasting, managing cash flow, and partnering with procurement. 

Picture this: Two finance teams at similar companies. Same industry. Same revenue dip. Same goals. But they take two very different paths. 

Team A responds by slashing software budgets and freezing hiring. Team B, on the other hand, automates its invoice workflows, digitizes approvals, and reallocates team time to strategic planning. 

Three months later, the difference is clear. Team A is buried in manual work and falling behind. Team B is identifying new savings opportunities and advising leadership on where to invest. 

That’s the difference between reactive cuts and proactive strategy. 

From Tactical Tasks to Strategic Value 

Gartner recommends that finance leaders reallocate spending from low-value, transactional tasks to activities that provide decision support and business insight. But that shift is only possible when teams aren’t underwater with the basics. 

This is where automation shifts from being a cost-cutting tactic to a long-term performance strategy. Intelligent invoice capture, automated routing, and built-in controls give AP and finance teams the freedom to focus on higher-impact work.  

Imagine how different quarter-end feels when documentation is digitized, approvals are streamlined, and reports are at your fingertips. You’re no longer spending hours digging through email chains or hunting down signatures. You’re equipped to make fast, accurate, and strategic decisions. 

And nowhere is that clarity more important than during budget season. 

Cost Optimization = Better Budgeting 

Budget season exposes these inefficiencies most clearly. Without good data, budgeting is guesswork. Without time, it’s rushed. And without automation, finance teams are often making decisions without reliable data. 

When automation supports your cost strategy, finance stops playing catch-up and starts leading the conversation. With cleaner data, fewer surprises, and more time to think strategically, your team can finally shift from reacting to planning. 

That shift opens the door to more strategic questions: 

• Are we spending in the right areas? 

• Can we renegotiate contracts? 

• Can we automate recurring spend categories? 

It is not just about closing the books faster. It is about stepping back, seeing the full picture, and making smarter, more confident decisions. 

It also enables a more agile approach to budgeting. With real-time data and flexible workflows, teams can adjust to changing business conditions without starting from scratch. They can scenario-plan with assurance and respond to leadership’s questions with answers that are rooted in truth and not just gut instinct. 

The more visibility and accuracy your team has, the more confident your budget decisions become. And confidence leads to action. 

The Cost of Doing Nothing 

Organizations often overlook the hidden cost of inaction. In a volatile market, sticking with outdated processes can be just as risky as making the wrong change. 

If your AP team is still entering invoices by hand, you are losing more than time. You are risking errors, missed discounts, and audit trouble. If your approval chains live in inboxes and sticky notes, you’re likely holding up payments or making decisions with incomplete information. 

Optimization isn’t about fixing what’s broken. It’s about equipping your team with the tools and visibility to stay agile in any economy. The most resilient teams are the ones who’ve invested in visibility, agility, and data they can trust. 

Implementing an Optimization Strategy That Works 

Cost optimization doesn’t happen overnight. But it also doesn’t have to be a complete overhaul. Here are a few practical steps to get started: 

1. Audit your current processes. Identify where time and money are being wasted due to manual work, duplication, or lack of visibility. 
2. Set optimization goals, not just savings targets. Don’t just look to cut. Look to reallocate toward what’s working. 
3. Automate high-volume, rule-based tasks. Accounts payable is a great place to start. It’s measurable, repeatable, and ready for impact. 
4. Use the data. Let automation tools provide real-time reporting to help identify trends, opportunities, and risks. 
5. Enhance your team’s capabilities through automation—not replace them.

From Cutting Costs to Controlling the Bigger Picture 

The finance teams thriving in 2025 aren't the ones that cut deepest. They're the ones that optimize smartest. They've moved beyond survival mode to become strategic business partners. The question isn't whether you can afford to automate your processes. It's whether you can afford not to. 

Ready to move from cutting costs to optimizing performance? 
Check out Turn Your AP Department into a Budget Planning Powerhouse, where we explore how automation helps finance teams gain better visibility, make confident decisions, and plan ahead with precision.