the working capital success guide - leveraging technology to effectively increase the value of cash
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Video/Presentation: http://www.proformative.com/events/working-capital-success-guide-leveraging-technology-effectively-increase-value-cash Board level executives are more focused on the treasury and working capital management functions than ever before. CFOs and Treasurers are scrambling to improve the timeliness and accuracy of their business information in order to more proactively pinpoint risks and potential shortfalls that could knock them out of business, or to successfully identify safe opportunities for investment income when surpluses are found. These executives are taking active steps to improve their working capital metrics and short term liquidity performance, and to minimize their risks throughout this historically unprecedented era of low interest rates and restricted banking liquidity. In this session, you will hear how Finance Executives are able to leverage technology to deliver greater visibility to their true cash position and better control over the complex processes associated with managing payments, collections, cash, liquidity, and risk. Speakers: Craig Himmelberger, Director of Solution Marketing, SAP Treasury & Risk Management Solutions Steve Pateuk, Director of Strategic Alliances & Business Development, Ariba Presentation delivered at CFO Dimensions 2013 - http://www.cfodimensions.com Track: Finance Technology | Session: 2TRANSCRIPT
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TheWorking CapitalSuccess GuideLeveraging Technology to Dramatically Shorten the Cash Conversion Cycle & Increase Return on Cash
Craig Himmelberger, DirectorSAP Treasury Solution [email protected]
Steven Pateuk, DirectorAriba Channels [email protected]
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“Working Capital Performance Deteriorates in 2012…• Opportunity now tops $1 trillion – Hackett Group
• Working capital +6% last year, and +25% over the last 3 years
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Volatility and restricted liquidity have companies in a vice• Companies need better cash visibility and forecasting
• Companies need better control over payments and collections
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Companies gain by connecting Treasury and Operations• Working Capital systems can better inform cash planning
• Better cash information enables better business decisions and actions
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Suppliers
Receivables
Buyers
Payables
Treasury Department
Financial Risk Management
Debt / Investment Management
Cash Management
BanksBanks
Payables Receivables
Payments Receivables
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Suppliers
Sales
Order Mgmt.
Receivables
Buyers
Sourcing
Procurement
Payables
Treasury Department
Financial Risk Management
Debt / Investment Management
Cash Management
BanksBanks
Payables Receivables
Payments Receivables
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SAP and Ariba Business Performance Benchmarking – By the Numbers
Established end of 2004
Complimentary service
Available to SAP and non-SAP customers
Overview
Reach
ContentCoverage
Over 15,000 participants from over 4,000 companies
Global in scope
Partnerships with ASUG and other user groups
Studies available in 12 languages
Over 50 business process assessments
Over 1,200 KPIs, over 5,000 Best Practices
Over 300 peer groups
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Percentage of companies with online forecasting models that regional and global organizations use to analyze current and historical cash flow trends
Source: SAP Performance Benchmarking
Better visibility and forecasting of cash enables companies to stay ahead of volatility and take control of their liquidity and business planning.
Companies are always seeking more accurate and timely information in their cash reporting and liquidity planning
Traditional cash management systems are not well-integrated to operational business systems where better information exists
Working capital decisions often have to be made with absent, imperfect, or inaccurate business information
13%
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Savings compliance & discount opportunity capture when invoice processing is automated and finance operations & treasury share networked data collaboratively
Source: Ariba Performance Benchmarking
Strategic utilization of working capital enables companies to finance operations at lower costs and with better returns.
It’s estimated that for every billion in revenue, companies maintain an average of $126M in excess working capital. Hackett Group
Confident and reliable liquidity projections can be used to drive systematic discount capture and optimize collections
Companies can finance improvements via procurement savings, increased investment income and reduced borrowing costs
95%
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The Rise of the Networked Economy
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Businesses Struggle with Collaboration
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Wasted Time and Resources
Higher Operating and Supply Chain Costs
Missed Sales Opportunities
Manual Paper-based CollaborationPoint to Point EDI, Portals & Single Process Solutions
Delayed Payments, Overpayments, and Missed Discounts, Slow Cash FlowLimited Visibility and Elevated Risk
Buyers Suppliers
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“65% of Best in Class companies have the capability to effectively collaborate with their network of suppliers versus only 21% of laggards. ”
SuppliersBuyers
Business Networks Facilitate Collaboration Between Trading Partners and Between Silos
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Take Advantage of Working Capital & Dynamic Discounting Opportunities
Significantly Increase supplier participation by in early payment discounting.
Capture existing discounts currently missed due to inefficient processes
Achieve greater return on short term cash invested in early payment
Improve working capital metrics of DPO and/or DSO
$2+m Discount savings per $1 Billion spend
Source: Ariba Performance Benchmarking
Better Working Capital & Discount ManagementBenefits
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Establish Collaborative Finance Processes
Reduce exceptions and improve efficiency of and visibility into financial processes.
Take advantage of new early payment discount opportunities to increase savings and return on cash.
Improve working capital performance through increase DPO and reduced DSO.
Capture negotiated contract savings leakage through automated, networked compliance to terms.
$10mSavings per $1 Billion spend captured by automating the invoice to pay process
Source: AribaPerformance Benchmarking
Better Collaborative Finance Management (AP/AR)Benefits
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IntercompanyConnectivityAnd OtherNetworkAdapters
CXMLEDI
SupplierPortal
PaperInvoice
Suppliers
Sales
Order Mgmt.
Receivables
Buyers
Sourcing
Procurement
Payables
Payables Receivables
Treasury Department
Financial Risk Management
Debt / Investment Management
Credit Mgmt.
Collections &Dispute Mgmt.
Cash Management
BankCommunication Mgmt.
In-House Banking
BanksBanks
Payments Receivables
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Award Winning Approach…
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Best Working Capital / AP/AR Solution
Best Cash Management Solution
Best Process Re-engineering Solution
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Proven Benefits of Networked Collaboration
>4,500 global suppliers networked enabled
98%+ touchless invoicing -- integrated with8 ERP systems worldwide
96%+ on-time payments – and enhanceddiscount capture
75% reduction in AP costs
Global VAT and regulatory compliance – incl.in China
>4,000 suppliers network enabled
>500,000 electronic invoices/yr. – integrated with 7 ERP systems globally
70% global invoice volumes moved from paper to electronic – incl. non-PO
>30% reduction in BPO costs
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Driving Business Results via Intelligent Treasury And Working Capital Management
Control Predict Execute
Know your accurate global cash position and all
anticipated sources and uses
Dynamically maintain reliable liquidity forecasts to turn insight into action
Increase the effectiveness of payment and collections from action to accounting
Include full sourcing and sales order data in all
cash and liquidity reporting and analysis
Use liquidity projections as a basis for all
working capital policies and decisions
Minimize wasted working capital and fully exploit it
as a source to fund operations
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Thank You!
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Ariba NetworkAdapter
CXMLEDI
SupplierPortal
PaperInvoice
Suppliers
Sales
Order Mgmt.
Receivables
Buyers
Sourcing
Procurement
Payables
Payables Receivables
Treasury Department
Financial Risk Management
Debt / Investment Management
Credit Mgmt.
Collections &Dispute Mgmt.
Cash Management
BankCommunication Mgmt.
In-House Banking
BanksBanks
Payments Receivables
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