Cash flow visibility, payments and predictability are essential to optimizing inventory.
Companies need to know exactly where they stand today and predict where they will stand tomorrow in order to execute the inventory purchasing strategy that will drive the best results for the business.
According to The Hackett Group, when it comes to effective cash management, “The performance gap between the top 25% and the bottom 75% is significant: underperforming companies could free $776 billion, or an average of $780 million per company, by matching the top performers in their respective industries.”
By providing automation, visibility and cash flow predictability on both the accounts receivable and accounts payable side of the equation, companies are able execute a precision inventory purchasing strategy.
Automation. Finance executives are expected to take a more proactive role in the organization when it comes to strategy, but outdated payment and money management processes stand in the way of success. According to a recent report from IOFM, inefficiencies with paper and manual processes result in more than 40% of employee time spent on activities that could be automated, meaning they spend that much less time working on strategic initiatives than can help with company growth. Digitizing and normalizing data facilitates the invoice approval process. If the automation platform additionally includes e-payment functionality, enterprises are able to ensure price and term compliance across the entire company.
Visibility. You can’t control, manage or improve what you cannot see. How do you manage your cash flow if you don’t have real-time knowledge as to the status of every invoice? Real-time visibility into invoice status also provides access to the transactional data needed to accurately forecast cash flow and make strategic decisions. Sellers can discover what, when and in what quantities customers are buying their product. Plus, businesses get insight to trends that enable them to pivot and capture new markets.
Predictability. Actionable insight to data gives companies the power to integrate concrete proof-points from the past into their future spend management and inventory purchasing planning. Additionally, advanced predictive analytics allow companies to identify potential credit risk problems well in advance. From the buy side of the transaction, businesses are able to ensure they are making the right payments for the right things at the right time.
The convergence of procurement, accounts payable, and account receivable is a growing trend. The ability to effectively bill and collect from customers on the accounts receivable side provides the cash flow necessary to fuel the procurement and accounts payable side for purchases related to inventory. A solution that provides automation, visibility and predictability for the processes of purchasing, paying and getting paid is vital to current success in spend management and to future growth.