What is keeping the CFOs up in the COVID situation is uncertainty about a range of rapidly moving issues that include how to track cash flows, financial planning, analyzing the company's financial strengths and weaknesses, and proposing corrective actions?
Cash flow management is primary and at the same time a highly complex and critical business process for all the organizations followed by profits and revenue.
How to ensure the continuity of cash flow management? A negative trend of cash flow can not only be detrimental to the future goals but also leave an impact on business sustainability.
The most complex problems are solved by breaking them into smaller components. It is worthwhile to ask if the organizations have answers to the basic but most critical questions governing the complex puzzle of working capital management. Let us approach it through order to cash (OTC) cycle. By analyzing certain scenarios, a business can conduct a first level check if it is likely to face challenges in recovering the money that it is anticipating will get generated in a specified time frame.
- Is the billing process fast enough to enable the receipt of money for the products or services?
- Is the sales cycle efficient enough? What can be the transformative force to measure that?
- Is the AR aging and collection process efficient? How long do the customers take to pay their invoices?
- Is correct data on display to measure the operational performance and get the business insights that enable effective decision making?
- Are the ERPs and applications integrated or fragmented leading to a lot of manual data processing and reports? Is automation an answer?
- Is there a budget available to enact the initiatives such as automated financial systems? Is there an in-house capability for automated financial systems?
Based on this analysis, we can conclude that the CFOs are looking for a streamlined, reimagined end-to-end technology led order-to-cash process which is not reactive but insights driven. This can optimize working capital, provide visibility of cash flow management, revenue, and a restructured billing process.
Here the need of a trusted strategic business partner arises who can help the organizations to read the risks and opportunities behind the data, processes, and systems to find the solutions which are optimal and ideal. An order to cash process offering, keeping in mind the short-term cash benefits and long-term business acceptability.
Now assume that you found that partner in your service provider. Here is how the next set of questions would look like:
- Can there be a productized solution to manage the end-to-end OTC business cycle, leveraging analytics and digital interventions?
- Can there be a differentiating value addition which provides an advantage over current band mix, gives location advantage, and labor arbitrage?
- Will that model be outcome based, enable the organization to meet the business objectives, keep the operational metrics, and controls framework in green?
- Will that provide real time dashboards and screens for the C Suite?
Today, organizations are looking for strategic digital process operations (DPO) partnerships that can help transform their business outcomes which are predictive and proactive. This usually needs a partnership from the design stage in an ideal scenario. It is not always possible to have the partnership since inception as the client engagements depends upon multiple factors and are driven by distress in most situations.
In current dynamics, DPO partners are brought in to provide quick fix solutions with instant value propositions to overcome the distress as there is not enough time to run detailed elaborate process due diligence study to arrive at conclusions and comprehensive project plans to implement the findings. What is needed is a bolt on solution which is a plug and play. This involves a matured drive of value creation, technology adoption, interdepartmental synergies, and compliance over identified risks and opportunities.
The solution also depends upon how resilient or scalable the business is, as it must complement the future adaptability and the organization’s long-term objectives of driving transformation.
It must provide real-time monitoring so that the CFOs can embrace it within their new transformative roles as milestones to achieve the clear end goals. The bolt-on solutions and embedded technology solutions should connect the dots between the pilot programs introduced in distress shaping up as strategic enablers for entire organization and an assurance to the C Suite that they are on a right long term track. What matters is keeping up with the pace and keep pushing forward as an engine to adopt the new wave of efficiencies when it comes to financial planning.