Navigating Tariffs, Inflation & Cost of Goods Sold

Publisher’s statement: This blog is an adaptation of an original editorial written by Dean Baxter, Enterprise Sales Executive at Medius, based on his experience and expertise working with financial decision-makers for over 25 years. Read the original editorial here.

As we move deeper into 2025, CFOs face increasing pressure from rising tariffs, inflation, and supply chain disruptions. These challenges are squeezing profit margins and making financial planning more complex.

Does this sound familiar?

"Too many times, when I meet with CFOs, the focus is on revenue growth. But now, the impact of tariffs on revenue and the trickle-down effect on consumers is taking center stage."

— Dean Baxter, Sales Executive, Medius

While revenue growth is key to profitability, long-term success also depends on controlling costs and maintaining healthy cash flow. So, what happens if revenue slows? How can you still protect margins?

A very effective—yet often overlooked—strategy in cost control lies in optimizing Accounts Payable (AP) operations.

Why CFOs should shift focus to AP

Visibility into the cost of operations comes down to two key areas:

An efficient, automated AP process gives CFOs real-time insights into COGS and operational expenses. With better transparency into invoices, payment terms, and supplier obligations, you can:

• Make informed payment decisions.
• Optimize cash flow timing.
• Reduce financial waste.

With complete visibility into your AP data, you gain control over spending and unlock opportunities for cost savings.

Just look at invoice processing costs – automation helps you slash costs by as much as 80% percent by automating AP processes, as shown in our Medius AP Benchmark Report.

A well-managed AP process can also help CFOs optimize cash flow while maintaining strong supplier relationships. Key strategies include:

• Extending Days Payable Outstanding (DPO):

  Holding onto cash during financial strain, like rising inflation or tariffs, offers short-term flexibility.

• Early Payment Discounts:

  On the flip side, paying early can lead to discounts that lower COGS.

Balancing these approaches ensures financial stability without jeopardizing supplier goodwill.

Manual AP processes are costly—not just in terms of staffing but also in inefficiencies like late payments and invoice errors. But when you automate, you can drive cost savings and efficiencies that impact the bottom line, including:

• Process invoices faster with fewer errors.

  The cost of manually processing a single invoice can range from $12 to $30–but automation can reduce this cost to as little as $3 per invoice.

• Reduce the need for large AP teams.

• Catch costly fraud before it happens.

• Allow finance teams to focus on strategic initiatives.

Instead of chasing down approvals, employees can focus on high-value tasks like forecasting and supplier negotiations.

Tariffs and inflation put added pressure on supplier relationships, making strong partnerships more crucial than ever. With the right AP automation, you can:

• Ensure timely, accurate payments.
• Avoid disputes over invoicing errors.
• Negotiate better terms with trusted suppliers.

Nearly half of supplier payments are delayed, even though 80% of suppliers offer discounts for early payments. By streamlining AP, companies can cut processing time from six days to one—unlocking early payment discounts, securing priority inventory, and improving credit terms. These advantages drive long-term cost savings and enhance financial stability.

The cost of poor AP management

Ignoring a critical process like AP management can have unexpected consequences, hidden costs, hurt profit margins, and lead to:

Today’s economic conditions demand financial agility. For CFOs, this means looking beyond revenue and focusing on cost control, cash flow optimization, and supplier relationships. A well-managed AP function isn’t just a cost center—it’s a strategic advantage. Automating and optimizing AP will improve COGS management, strengthen financial resilience, and position your business for long-term growth.

Leveraging technology for AP optimization

This is where solutions like Medius come in. We understand your challenges and can help you achieve process autonomy, bottom-line savings, and internal efficiencies. We’ll help you transform AP from an operational function into a bottom-line growth driver.