Tips for Successful Working Capital Optimisation
Companies
are currently undertaking initiatives to better manage their working
capital as they cannot fund their businesses in the same manner they did
in the past. Credit is either too difficult to obtain or more expensive than before. Most
have taken short term measures to stem the flow of cash (paying
suppliers more slowly, getting money in faster from customers, and
indeed cutting jobs) but these measures are running out of steam, are
bad for long-term business relationships and for the wider economy.
Successfully
managing working capital requires an executive sponsor who can mediate
across a range of operational and financial functions, and it’s the CFO
who has the best chance to lead this effort and make it work.
Unfortunately for many CFO's this falls outside their comfort zone,
since it requires complex planning skills, as a result many businesses
are missing a huge opportunity to improve their profits .
We hosted a very interesting panel discussion at Finance Transformation and CFO Forum last Thursday in London on "Fuelling the Engine for the Road Ahead: Successful Working Capital Optimisation" with Lynda Atherton-Miles Shared Services Director at Britvic, Nick Bean from Greene King and Ralph Geertsema a independent consultant joining our panel.
Detailed below were some points raised by the delegates and panel:
Standardise
your eInvoicing Strategy – as PDF seems to be the de-facto standard
output from most Vendors Accounting systems why not encourage your
Vendors to email invoices in PDF format – this is a lower cost
alternative to eInvoice Networks and scanning paper invoices.
Most
organisations have invested in Strategic Procurement Processes – focus
should now be on the noisy processes such as Long Tail Vendors, Non-PO
behaviours and reconciliation processes.
Use
Corporate and Purchase Cards as part of your Vendor early settlement
strategy, negotiate extended DPO and maximise the Rebate opportunities
offered by the Card Issuing Banks.
You can only measure what you can see – access to spend data is vital to manage the costs to the business.
Implement
customer portal for electronic billing, customer self serve for copy
invoices and statements, ability to pay via debit card through the
portal.
Implement dispute management software linked to automated cash allocation.
We
would like to continue this debate and would welcome your thoughts. If
you would like to join the debate or have any questions on this or any
other topic please do contact me anytime sarah.vasili@invapay.com or join our community.
May I take this opportunity to wish you all a great March.
Best regards
Sarah
Sarah Vasili - Operations - Invapay Payment Solutions Ltd.
