Whitepaper - How Companies Are Improving Cash Flow & Reducing Costs with Credit & Collections Automation
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Overview
Working capital management is the lifeblood of an organisation, touching on virtually every business process involving customers, suppliers and products. Managing the day-to-day operating cash cycle is important to every business in order to ensure a profitable operation. Under the pressure of increased demand, the cost of bank credit is already starting to rise suggesting that, over time, it may not remain the reliably cheap source of capital it has been in the past. In addition, using long-term debt to fund short-term obligations is a classic financing problem, as well as a significant consideration for analysts to consider as they watch how companies manage their long-term debt.
The question is what to do as an alternative. For many companies, the answer can be found on their own balance sheet, by optimising working capital management practices as well as by more efficiently executing the policies and processes that impact working capital in the C2C (customer to cash), P2P (purchase to pay) and F2F (forecast to fulfil) cycles. Cash freed from working capital can also be used to pay down debt, buy back stock or even increase the company's dividend. Companies can unlock dramatic amounts of capital from their operations in surprisingly short periods of time; with no obligation to pay it back.
The upside is that such efforts do more than just liberate cash from the balance sheet. As they are rooted in process-based effectiveness, they also improve a company's transaction efficiency and operating speed as well as reduce error, waste and rework throughout the organisation. This results in cleaner transactions between the company, its suppliers and customers making it easier, quicker and cheaper to do business with each other.
With companies looking to leverage working capital improvement, there has been a conscious emphasis placed on Accounts Receivables. Historically, the Accounts Receivables operation has been highly inefficient as a result of the lack of integrated systems for Order-to-Cash management. It is only by addressing the root cause of the problem that the collections problem can be resolved. Fortunately, an automated Order-to-Cash solution can produce tangible benefits - financially and operationally. Identification of root-cause analysis will not only reduce working capital, but also make your customers happier, more likely to pay on time and more willing to give a larger share of their business. That equals growth!