Managing Cash Better in an Era of Limited GrowthEnlightened finance and procurement professionals can help optimize cash use and working capital. Join this panel of experts and hear about the latest strategies for extending payables, accelerating receivables, maximizing discount capture for high-yield, risk-free returns on cash reserves and using third parties for financing your supply chain. Attendees will hear about Ariba Discount Professional and b-process's new reverse factoring solution, Invoice2CASH®, and leave with the tools necessary to manage cash better in today's networked economy.
enterprises see the benefits that the combination of cloud computing, enterprise apps, mobile and community can bring to their business…CFO Magazine study of global finance executives: View using Networked technologies to better discover, connect, and collaborate with their customers, suppliers, banks, and other trading partners as a top priority for agility and growth.CIO Magazine study found IT executives prioritizing investments to improve external collaboration.Research from Harvard Business Review points to inter-enterprise collaboration as THE key competitive competence going forward.McKinsey’s study on the impact of the Networked Enterprise found Networked Businesses outpace their less Networked peers in nearly every category of business performance…by a wide margin.Sources: CIO: "Increasing the Value of ERP with Cloud-Based Business Commerce Solutions," July 11, 2011CFO Research Services: "The New Deals: Why Companies Are Deepening their Alliances with Customers, Suppliers and Bankers in a Post-Recession Economy, ” April 2011.
As Europe moves into a period of recovery and revenue growth, the issue at question is whether the changes made are sustainable and whether companies are truly creating a “cash culture.” Although 60 percent of the companies featured in the survey improved their working capital in the past year, only 5 percent of companies have achieved upper-quartile performance within their industry and have managed to improve in all three working capital elements over a five-year period. So what can companies and CFOs do to ensure ongoing focus and sustainability?So what can companies and CFOs do to ensure ongoing focus and sustainability?Measurement and accountability: Establishing a good measuring system is critical – one that aligns measurement with accountability, reflecting and balancing all elements. However, such a system should not exist just at the top level but throughout the entire organisation.Incentives: The idea of an incentives plan sounds easy, but it is actually very hard for organisations to implement one. The elements driving behaviour of the company’s revenue, profit and cash must be balanced not only at management level but across process owners and sales teams.Organisational alignment and collaboration: It is critical to replace the perception that working capital is just a finance issue with an understanding that working capital comes from an amalgamation of cross-functional policies and processes. Further, companies must balance objectives, margin, cash and sales as well as ensure pricing (for example the discount-terms trade-off) are properly understood and managed. The organisation that succeeds will create structure through in-company committees that help to build awareness and promote best practice policies and processes.
The index is based on a survey of approximately 900 US trade credit managers in the second half of each month, with about equal representation between the manufacturing and service sectors. The survey asks respondents to comment on whether they are seeing improvement, deterioration or no change for various favorable and unfavorable factors.A resulting CMI number of more than 50 indicates an economy in expansion; less than 50 indicates contraction.
Enrico’s slide
This overall strategy can increase your discount savings 2-5x what you are earning today. Many companies have some level of prenegotiated early pay discounts typically with less than 5% of their supplier base. And due to inefficient, paper-based invoice processing, most companies capture less than half of the discount savings available to them. By implementing electronic invoicing with approval workflow, companies are able to approve invoices in 5 days or less and therefore able to capture about 2x what they are today with their existing opportunities. Companies, like Republic Services, are leveraging Ariba’s cloud-technology and best-practice services to increase their savings 3-5x what they previously captured by increasing the number of suppliers participating in their discount programs during the enrollment process, and introducing sliding scale or dynamic discounts to capture discounts on targeted hurdle rates aligning the buyer’s and the seller’s objectives (i.e. bottom line savings / getting paid faster). Ariba Discount Professional provides buyers and suppliers the visibility and control they need to manage cash better with the Ariba Network by connecting you to nearly 1 million trading partners, many of whom you are already doing business with and many of whom are looking for improved cash flow. Ariba also assigns a customer management executive who helps measure your success against the stated objectives for continuous performance measurement and program adjustments. The result is an increase of 3x-5x in your early payment discount savings, earning you an APR of 10-30% while providing needed liquidity to your suppliers. This is the “treasure” in treasury.
Located in France with capabilities and support on six continents B-process adds 130 experts dedicated to Ariba’s electronic invoicing business, Companies like Eurocopter, L’Oréal, Total, Carrefour, and 32K others exchange invoices over the B-process platform processing over $80 billion in spend annuallyThese customers are also confident that their e-Invoicing solution is VAT/tax compliant in 24 countries. [click] to next slide --