As Treasury Goes Virtual, Can Forecasting Keep Up?

money-forecastingAs businesses continue to expand their global footprint, and new technology changes the way we work, the success of the treasury department is contingent on how well it operates in an increasingly virtual setting.

That’s the latest from PwC’s Global Corporate Treasury Benchmarking Survey 2017, which captures the views of over 220 treasurers and Chief Financial Officers (CFOs) from around the world.

With a full two-thirds of people involved in treasury processes are no longer reporting directly —or even indirectly—to the treasurer, the function is no longer a “department” but rather a process. In fact, many treasurers are handing over more treasury tasks to third-party providers or internal shared services.

In a statement, Sebastian di Paola, Global Corporate Treasury Leader at PwC, said, “Treasury is becoming increasingly virtual and treasurers need to be jacks of all trades by collaborating more with the business, shared services and banks and raising their game in IT security, valuation and financial risk management.”

Top of the Agenda

The solution, says di Paolo, is a strategy that takes a consultative approach, integrates other business processes and is heavy on automation. Treasurers are being asked to step up and become stewards of liquidity and better cash flow management.

A top priority for both CFOs and treasurers is cash flow forecasting, with 42% ranking it as a priority and 80% of these people rank it as high or of critical importance.

Yet, as the report points out, forecasting has been ranked as a priority for the past two decades, and in the 2017 report, over half of respondents cite concerns like accuracy of data, data collection, mapping and proper tooling. Despite huge technological advances, treasury is still a manual, spreadsheet based function. Plus ça change, plus c’est la même chose, it seems.

For treasurers to truly attain better cash flow forecasting and reporting, they must first embrace digitalization, process transformation and predictive analytics. The report points to the importance of attaching KPIs to data accuracy. (Be sure to download the full report here.)

Our Experience

Sutherland has helped many clients contain costs and improve cash management. Finance executives know what has to be done, but internal teams have limited resources for overcoming the obstacles of a lack of centralization and visibility. They struggle with getting real-time information and actionable data.

Optimizing cash management is essential to business success. If you’d like more information on how Sutherland can help you improve cash flow management and significantly reduce your costs, please schedule an appointment today for a deeper conversation with one of our experts.

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Are My Processes Best-in-Class?

Companies that are serious about improving performance and staying ahead of their competition in these volatile and changing times are constantly searching for better ways of doing things. From customer-facing functions like customer support to the behind-the-scenes finance function, best-in-class practices and processes are the hallmark of an industry leader.

High-performing enterprises embrace a culture of continuous process optimization and improvement. It’s not an option, but rather a necessity. As technology changes and continues to disrupt business, what was relevant five years ago seems as old as the dinosaurs now. C-suite executives understand that without top-performing processes they may soon find themselves out of step with their market, regulatory compliance and quickly falling to the back of the pack.

How Do You Know?

But how do you know if your processes are best in class? How do you know if you are measuring the right KPIs? Where do you stand compared to your competitors? Can you get money through the door and into the bank more quickly, or are you lagging behind the industry norms? Continue reading

The F&A Experience

When you see a football player effortlessly pluck the ball out of the air, and in one single move, change the game completely, you understand that days, weeks and years of practice went into the automatic reflect behind that play. When online shopping channels make it easy to purchase (and check out) with the single click of a button, there’s no doubt that thousands of hours of design thinking and GUI coding expertise went into that seamless experience.

It takes a lot of effort to for anything to appear effortless.

The ongoing march of technology, and the intersection of multiple technologies—combined with human ingenuity—make many of these experiences possible.

But how often is the F&A experience considered?

When it comes to partnering with clients, there are two outcomes that should be considered:

  1. How can we improve the client’s employees experience with their own processes and practices?
  2. How can we favorably impact our client’s customers’ experiences?

Inevitably the two are interconnected. Continue reading

Cash Management Not Managed Well Enough?

rising costsIs your company debt going up even though cash on hand is stable? You’re not alone. A recent study by The Hackett Group brought to light some serious challenges in cash management. The study followed 1,000 US-based companies and noted that the cash conversion cycle (CCC) performance declined by 2.4 days, or 7%, from the prior year. The 35.5-day CCC average is now higher than it’s been at any time since 2008.

But averages can hide bigger issues. Consider this: Median companies are seven times slower at turning capital into cash than leaders. Cash is collected more two weeks slower than top performers: 43.5 days (median) vs 25.1 days (leaders). When it comes to paying suppliers the median group shelled out two weeks faster at 41.1 days as opposed to 59.4 days for leaders.

The study says that, by not following the best practices of leaders, this middling group left a whopping $1.07 trillion on the table. Continue reading

Eyes on the Horizon or Rearview Mirror?

rearviewImagine you are merrily zipping along a highway in your car, pulling into the fast lane to pass the slower vehicle in front of you. You’re alert, you check your side and rear-view mirrors and quickly look ahead to watch the road in front of you. Suddenly, there’s a resounding BANG! as your front hood unexpectedly opens, flips back and covers your front windscreen.

Without a clear view of the road ahead, and only a rearview mirror, you are driving blind. In the fast lane.

While no harm comes to our hypothetical driver —who manages to pull off to the side, tie down the broken front hood and drive slowly to the nearest garage—this harrowing tale can be seen as an analogy to F&A departments around the world.

Too many finance professionals are relying on information that stems from backward-looking, often incomplete data. Traditional finance departments run the risk of being hobbled while more agile, digitally savvy competitors pull ahead.

At a Tipping Point

The quality of decision-making information can be a tipping point, one that is critical to organizational success and differentiation. Finance is the nexus of information, pulling in data from all silos—operations, marketing, HR and supply chain, etc. This enterprise-wide overview enables the finance department to partner with a number of diverse internal functions to deliver greater insights and value.

A recent Gartner trend report for 2017 underscored the need for bold innovation, the ability to navigate the fast-paced waters of technological change and the pursuit of higher quality, forward-looking information. Continue reading

Setting Goals, Meeting Targets: KPIs for the Win

qualityIt’s a fierce business world out there. The stakes are getting ever higher, with growing competition and an increasingly integrated landscape. It’s essential that companies have key performance indicators (KPIs) that can help drive operational improvements, accurately assess performance across all levels of the organization and deliver long-term value.

The only way to achieve all that is to have an effective process for selecting and monitoring KPIs.

The KPI Uncovered

These indicators show how a company or group is performing on its goals, measuring specific activities against a set target or benchmark. Remember, if a measurement doesn’t directly influence the achievement of business goals, it’s not a KPI; it’s merely a metric. Continue reading

The Case for Convergence in F&A Transformation

600px-shutterstock_149939726In today’s globalized world, many companies have F&A departments spread throughout a range of geographies, including the Americas, Europe and Asia. Such widespread corporate presence opens the door to markets across the map. But international access presents its share of challenges—especially when it comes to managing cash.

When we’re asked to address client challenges like improving working capital or delivering higher quality, timely reporting, many times one of the first root causes is the “run your own shop” approach to regional and global F&A departments. It’s not uncommon to find each finance function operating its own processes and technologies. As a result, many globalized businesses suffer from significant – and costly – F&A disruptions, needless repetition, undue human error and frequent reporting delays.

The Transformation Essentials

You hear a lot these days about business transformation, in the finance department and throughout any organization. Usually the conversation is in terms of digital transformation. The idea of the F&A function requiring minimal technology is going by the way of the dodo. Business leaders know that automation is key to all areas of success, including the formerly paper-heavy, manual finance function. Continue reading

Fortune Favors the Transformed

As we boldly march into 2017, there are few things that are certain. And, one of these certainties is uncertainty. If there is one thing all the economists, pundits and industry commenters can agree on is that the future is coming faster than ever before.

The 2017 —and foreseeable future— business environment will be characterized by constant change, from fluctuating markets to political disruption to new technology. The C-suite is feeling the pressure from all sides, and large global corporate entities (with firmly established and entrenched procedures) are expected to be as nimble as a Silicon Valley startup.

In a recently published report, Future-proofing the CEO: Why Chief Executives need to adapt in an unpredictable world, 71% of those polled thought that technology and digital would be the biggest driver of change in their industry over the next 10 years, yet only 40% thought their businesses were currently well prepared for this change.

For companies looking to stay ahead of the competition, acquire or merge with another company, or create new business lines, this ability to keep pace with technology and digital change is a Number 1 priority.

The Process Principle

Yet, technology is not the sole factor in digital transformation, whether it’s the Finance department or any other area of business. Real transformation cannot happen without the underlying processes changing. Outcomes can be aligned with strategy, but unless there is a serious rethink about how things are done, technology will never reach its full potential. Continue reading

The Whys and How of AP Transformation

invoicingIn the past, the Accounts Payable (AP) department was viewed as a necessary cost center. Yet, best-in-class companies understand that by refining AP processes and technology they can realize significant cost savings, drive up the number of transactions processed and reduce errors.

The Why of AP Transformation

CFOs, Controllers and accounting department managers need to be able to accurately evaluate how their teams are performing. Companies often look to benchmarking surveys or their process partners to get insights on how their internal finance processes stack up to other organizations in terms of cost-efficiency, transaction speed and error rates.

Recently, APQC, an authority in benchmarking, best practices, process and performance improvement, and knowledge management, released a survey of 997 organizations concerning the costs of AP processes. The member-based organization calculated the metric based on “the annual process cost divided by the total number of invoices processed annually.”

The result makes a strong case for investing in automation. Why? Manual labor is still rampant in the AP process. APQC notes that manual labor accounts for 62% of total AP costs. This need for human intervention is triggered by PO, shipping and receiving data errors, and invoices requiring employee involvement.

When this all shakes out, laggard AP departments spend two and a half times more than top performers spend on invoice processing.

The How of AP Transformation

Today, AP has become a significant strategic component in successful enterprises. By leveraging AP strategically, they can achieve additional savings by utilizing discounts and avoiding penalties.

AP operations can fulfill a more strategic role in the enterprise and realize significant cost reductions while increasing efficiency when you deploy these improvements:

Centralization & Standardization—Key to realizing significant improvements in AP functions is consolidating and creating consistent processes. Unifying multiple geographic locations has a three-pronged effect: 1.) It reduces variations within AP processes; 2.) It eliminates redundant costs; 3.) It provides stronger internal control over the overall AP process.

Digitalize—Invoice data entry and other aspects of the average AP process are both low-valued and labor-intensive. OCR technologies, e-invoices, EDI are some key initial steps to digitalizing the intake process, and avoid drowning in paper. For faster, more efficient and direct AP processing, automated workflow technologies, RPA and more advanced business process management (BPM) technologies can stitch together all the transactions steps and build business (matching, routing) rules around them. This allows for “hands-free” automated purchase order matching.

Optimize—After the initial gains in transaction speed, reduced costs and decreased errors have been realized, it’s important to not get complacent. Once a new benchmark is set in terms of veracity, volume or velocity of AP transactions, ongoing work is needed to not only monitor existing KPIs but to constantly look for new ways to improve the process.

Do your AP processes, benchmarks and KPIs measure up? We’d be happy to offer a free assessment of your current practices.

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2017: What’s Your Email Resolution?

startup-photosAccording to a recent study by McKinsey Global Institute, the average American worker spends 28% of the workweek reading and answering email. The report didn’t specify which departments they polled, but if you ask anyone in the F&A department, many people might respond that they strive for a mere 28%.

For finance professionals, trying to stay on top of email is a losing battle. Just as you read and reply to one, another one (or two) pours in. And the very act of replying can be self-defeating as it inevitably results in a response email, increasing the futility of Inbox Zero.

Another part of the problem is that email is addictive. The anticipation or rush of new emails can trigger a surge of the chemical dopamine, a key player in our information-seeking behavior.

Perhaps even worse, email can dumb us down when it comes to performing our work. Neuroscientist Daniel J Levitin is quoted as saying: “When trying to concentrate on a task, an unread email in your inbox can reduce your effective IQ by 10 points.”

If all this sounds frighteningly familiar in your F&A department, it might be time to consider putting this atop the New Year’s resolution list: Break the email habit. Continue reading