The Strategic CFO : Unlocking P2P Efficiencies
When the question “What does Automation mean?” is posed to AP and Finance professionals, most responses are on the lines of “It relives us from the burden of inefficient, routine manual tasks like document sorting/filing, validation checks like PO/invoice/receipt matching, manual PO and Invoice data entry, approval routing of payment and manual ERP entry of transactions”. More often than not, a business case made for automation is based largely on the cost savings these factors garner. Invoicing and P2P automation undoubtedly save cost, but a CFO might require a lot more from automation to see value and return in this digital transformation initiative. From the perspective of a CFO, just saving cost isn’t enough. He bears the onus of many more tasks ranging from financial forecasting to risk management.
Changing Role of the New Age CFO
As companies become more dynamic, the CFOs role has become more expansive. Not only are the CFOs responsible for improving their companies operating performance, they are also expected to manage risks, give out accurate forecasts, plan and budget. As companies become global they are prone to global trends, standards and competition from organizations across globe. Such a situation demands the company to be agile and in sync with the current trends. The obligation to ensure the organizations agility is the CFO’s.
In fact, according to a survey conducted by CFO magazine it says that 77% CFO state the agility of their business is a major concern while only 23% of them are confident of their company’s ability to maintain unforeseen business obstacles.
Looking at a few top goals of a CFO according to the same survey, over 70% of the survey respondents say that supporting decision making with actionable data has become their primary focus .An intuitive tool or a potent piece of technology will provide the CFO with access to real time data and allow easy exchange of information across department so he can take a well-informed, data driven decisions.
Technology Enabled Cash Flow, Compliance and Cash Management
A specialized P2P solution tightly integrated with ERP and Financial Performance Management systems help Gartner the following chief benefits to a strategic CFO:
- Cash Flow and Working Capital Management
Powerful and advanced procure-to-pay soft wares not only states where the organization is spending but renders a more granular view so actionable decisions can be taken based on information pertaining to spend.
P2P software also helps the CFO gain more control over the cash flow of the organization. Since they have complete visibility into the supply chain, they can decide to make adjustments in the cash flow of the organization by deciding to pay the vendors sooner. The Dynamic Discounting module is an incentive that facilitates deriving more value out of the early payments made to the suppliers.
The buyer can negotiate a certain amount of discount based on how early they’re willing to pay the invoice. This visibility into payables, Days Payable Outstanding (DPO) and the organization’s entire supplier database enables the CFO to maintain optimum levels of working capital.
- Compliance and Controls
Beyond compliance to policies, spending limits can be imposed. A smart P2P solution can give you insights on purchases that are currently off contract. These purchases, if contracted would have allowed more cost benefits and better pricing.
The advanced analytics and reporting capabilities also allow the CFOs to have complete visibility and control on the spend according to departments as well as line items, if necessary. It also helps them understand if there is scope for building strategic relationships with select suppliers or consolidating a few services so as to enjoy better cost benefits. An automated invoice approval workflow that usually comes as a part of P2P suite can aid the CFO in maintenance of audit trials for better control and promote adherence to corporate policies too.
- Credit Management
Credit management is an integral part of the payables process. It is often observed that credit extension and management involves a lot of friction between parties involved, due to lack of information and visibility.
For instance, when a supplier sells the invoice to a third party at a discount, the third party would want the supplier to vouch for the fact that he will be paid by the buyer for the invoices submitted. This information is often hard to obtain in paper-based processes, but when it is a supplier network, there is an abundance of data that can be factored in the calculation of risk of the buyer defaulting. It could be factors like previous transactions between the buyer and supplier, how long it took for the buyer to settle the payments, how often have they missed payment deadlines etc. In this case any barriers that cause friction can be eradicated and the credit extension activity can be a smooth and more efficient one.
A modern day, strategic CFO who looks beyond process efficiency should be equipped with potent and sophisticated tools that facilitate not just error-free and efficient processes but also help him achieve all his other objectives like promoting savings, maintaining optimum working capital, incorporate compliance adherence etc. A smart and intuitive P2P suite is definitely a tool the CFO should be armed with!
To know how best can a CFO Implement an Automation Solution and gain the maximum Return On his investment, attend our complimentary webinar by thought leader Mark Brousseau, President, Brousseau & Associates.