Insights for Procure-to-Pay and Finance Leaders

Simplifying cash management for finance

Sometimes cash management can feel like a Rube Goldberg machine: turning the simple journey from PO to invoice into a needlessly convoluted and complex system. And that goes for just about any tactical process you have to navigate manually.

The status quo for most financial departments causes multiple sources of cash management truth for a singular enterprise. One part of the finance team is working from one set of assumptions based on their data, while another part is working from an entirely different set of assumptions based on their own set of data points. Trying to get one source of truth for your enterprise’s cash position can seem Sisyphean: you gather everything you need only for it to all change the next day.

Enter automation. Because of its ability to simplify onerous processes once done manually, automation is impacting every business process these days, and finance is no exception. Automation has the potential to transform the way your entire finance department views cash management. Imagine having access to that coveted one source of truth for your company’s cash position. This is a critical building block to get your finance team one step closer to a seamlessly integrated cash management solution.

Look, we know the hype machine around automation can make anyone a skeptic. But the potential gains are worth the implementation. Here are three common finance complexities and how automation can simplify them.  

One: Coordinating and configuring data

The modern treasurer can have what seems like hundreds of different sources, portals and formats to toggle through to gain an accurate picture of the company’s cash position.

The reality is, there isn’t one fundamental cash truth in a siloed system. Each system has data that might add a new understanding of your company’s cash position. Getting to one accurate view of your truthful cash position takes coordinating and configuring multiple points of data. Compiling it takes time. It can take days to get a synced up snapshot of your financial landscape.

You know where this is going: while you’re organizing all this data, invoices are being paid and received, early payments are being processed, and business is moving as usual. So it’s great that you’ve finally got all your systems synchronized, but in reality, it’s pointless work since the information is two days behind. So does it make sense starting all over tomorrow working on configuring data into another outdated picture to produce outdated information?

When you choose the right automated system, you get real-time, instantly coordinated information across the whole financial team. The multiple sources of truth combine into what your financial snapshot should be: one updated and accurate picture of your enterprise’s cash position. A good automated solution provides on-demand and real-time digital insight into your finances, allowing for confident and instant data-driven financial advice for your enterprise.

Two: Legacy systems

The problem with utilizing legacy systems in cash management is that even if they’re working well for your company right now, they’re built on archaic technological infrastructures based on outdated supply chain assumptions that simply don’t match modern scenarios. Updating one of these systems takes considerable energy. Tackling the challenge of retrofitting an old system to new processes wastes additional time that could be devoted to pure innovation.

And if you’re like many enterprises (if you’re reading this, we suspect you are), one of your key initiatives is global compliance. And you know that one tiny mistake can cost you a fortune. Too bad your legacy system doesn’t guarantee compliance, leaving you in the dark for potential areas of risk. It doesn’t have real-time access to invoice data in foreign currencies. And on top of all that, you have to weigh the cost of updating it to a new version attempting to tackle these new regulations and complexities in finance with ad-hoc solutions. Often the new version feels like bolted on solutions that don’t get at the core changes in modern finance.

A cloud-based solution is designed for innovation, allowing rapid change and market agility. Modern platform services allow you to subscribe to their solution: giving you flexibility and freedom – you don’t have to worry about finance being locked into a cost center function, instead, you can begin to do the job you want: provide strategic input to be a more value-added function of your organization. A good platform service will continuously roll out updates and provide real-time insight into supply chain disruptions, potential ways to save money, and other key areas of interest. A top-tier cloud-based solution will have global systems, regulations, compliances, and currencies built into their service. These services are built toward scalability: since they’re focused on innovation, they don’t have to spend needless time retrofitting old systems to support new solutions.

Three: Risk Management

Corporate treasurers are more and more embedded in the strategic decision making of their organizations; in fact “87 percent believe that treasury now enjoys a strategic position in their organizations.” But with that positioning comes an ever greater range of risks, whether it’s financial, operational, country, or counterparty. You’re handicapped if you don’t have immediate access to information to help manage this risk. And that dreaded experience working with paper can make you feel left in the dark. Think of a risk management process, and chances are a ton of it is manual. All those terrible accounting rules for derivatives? You have the potential to automate all of them.

Automation has major implications for risk management in internal audits as well. Do we even have to say that they’ve been unbearably labor intensive and prone to error? So much of it is routine data sifting, that automation can take over nearly every aspect of internal audits. That takes away a major pain point for the auditor, letting them focus instead entirely on interpreting the data.

Where to Go From Here

So that settles it. Maybe your legacy software is akin to that old car you used to own. It was reliable and got you where you were going, but it’s running on fumes now. It’s time to consider moving on. Let that thing ride off to its own legacy land having been a faithful vehicle for its lifetime. You might be sentimentally attached to that old clunker – you gave it a name, after all –  but when you realize the risk it’s putting you in every day, the choice to upgrade is clear. Transitioning your financial department to automated systems will feel like you’re moving from roll-up windows to a spaceship with futuristic technology. You’ll have access to insights in seconds that you didn’t even imagine was possible before, giving you critical insight for more effective risk management. And you’ll be able to think strategically, plan for the future and collaborate across your whole finance team.

See how DHL transformed its supply chain with automation