Rethinking Working Capital Management and Payments

Improve your cash flow, protect your supply chain, and increase agility with a new framework and best practices. This e-book walks you through an operating model for optimizing working capital, digitizing payments, and mitigating supply chain risk.

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In uncertain times and beyond, get the most value from your working capital

You will learn...

  • Three areas to optimize to take to improve your supplier health and treasury yields
  • How to leverage DPO, EPD, and SCF to develop the best payments strategy for your business
  • How to drive alignment across treasury, AP, procurement, IT, suppliers, and banks.
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Smart finance leaders set their businesses up for success by investing in processes and systems that enable agility and can respond quickly to disruptions. These initiatives also allow organizations to get ahead and invest when the time is right.

In order to achieve this agility, organizations are updating the processes that maximize capital and mitigate risk. Moreover, every strategic CFO is now prioritizing the optimization of working capital and payments as yields on cash hover near record lows and it has become more essential to ensure supplier health.

This guide provides a new operating model and best practices to address the challenges of fragmented processes and misaligned objectives. If you are a finance leader who wants to support stability today while setting their business up to thrive in the years ahead, you will benefit from this e-book.

To fully leverage payments in order to ensure business agility and supplier health, organizations need a new BSM-based operating model. With BSM, you can digitize each step of the process, from getting the right payment terms in supplier contracts to effectively managing payments, running early payment discount programs, virtual cards, and other working capital programs.
Rethinking Working Capital Management and Payments e-book


Why is it often the case that working capital optimization and payments strategies don’t work?

One reason that working capital optimization and payments strategies often don’t work is as a result of lost profitability caused by a failure to take advantage of Early Payment Discount (EPD) programs. Secondly, many organizations’ payment strategies don’t allow the organization to take advantage of extending Days Payable Outstanding (DPO). Optimizing DPO requires understanding the payment terms in supplier contracts, supplier needs, and collaboration with the AP team to use the right payment processes at the right time with each supplier. Another problem of many strategies is the heightened supply chain risk stemming from the inability to have early visibility into supplier health. Your strategy must enable you to obtain a comprehensive view of the financial health of your suppliers. Finally, many working capital optimization and payments strategies don’t work because the operational complexity of payments impacts DPO and hinders profitability. Ideally, AP teams pay suppliers when it's best for managing DPO and maximizing EPD, not just when the invoice arrives. For more details, please see the e-book.

Why is supplier adoption of digital processes so important?

The best digital payment and working capital strategies fail to deliver value when suppliers do not adopt them. By integrating early-payment discounts, supply chain financing, and v-card programs into the flow of everyday transactions, and providing choice and flexibility to suppliers, companies can increase supplier adoption. For instance, incorporating virtual cards and/or early-payment-discount offers into purchase orders increases supplier adoption.

What is the solution to breaking through siloed approaches to payments, AP, procurement, and working capital optimization?

The solution to breaking through long-standing siloed approaches to payments, AP, procurement, and working capital optimization is deploying a comprehensive Business Spend Management (BSM) strategy across the company complemented by a BSM platform that connects all processes in one place. By integrating all aspects of spend and buy-side cash flow, from procurement to payments to working capital optimization, BSM takes a holistic approach to how companies source, procure, expense, invoice, and pay for the goods and services that make their business run. Modern BSM platforms offer seamless integrations not only with existing ERP systems but also with suppliers and banking partners. With these groups working together in one system, there is great potential to free up cash while supporting struggling suppliers.