The Insider’s Guide To Improving Payments And Cash Flow: Set Your Goals

Alan Cohen and Scott Pezza

Part 2 of the Payments and Cash Flow Series

“Goals that are not written down are just wishes.”
-Anonymous

In the early stages of a payments or cash flow initiative, you must have clearly defined goals, so stakeholders understand how success will be measured. While it’s possible that goals can change based on evolving information, having clear goals (“kindergarten simple!”) will motivate stakeholders towards a common purpose. These goals should be quantitative to enable stakeholders to measure progress.

Here are examples:

Key performance indicator (KPI) Calculation Sample results
Cash flow Incremental cash flow gained: measured as annual spending / 360) x (number of days extended) $1 billion in spending extended 15 days = $41 million cash flow gain
Discounts earned Amount of discounts or APR earned $1 billion in targeted spending typically earns $1 million to $2 million in early payment discounts
Payments automated Number of payments automated Checks converted to Automated Clearing House (ACH) payments or existing payments converted to a new method (such as card settlement)
Supplier participation Percent of targeted suppliers participating Stronger compliance message > stronger supplier participation

Timeline

With your goals defined, the next step is a timeline of events. When thinking about the timeline, consider when you want to “go live” with your payments and/or cash flow program. Work backwards to allow time to incorporate the following:

  • Define the team. You’ll need executive leadership: treasury, accounts payable (AP), procurement, and IT involved. In addition, include marketing to help with the message.
  • Segment suppliers. Identify which suppliers to target and how to best approach them.
  • Craft communications. You’ll need clear messages for your staff and suppliers.
  • Educate internal stakeholders. No mixed messages! Consistency is important.
  • Inform suppliers. Give advance notice with clear direction and options for suppliers.
  • Deploy technology. If in scope, deployment and communications go in parallel.
  • Solicit supplier participation. Start with a test group, but always plan ahead.
  • Enable test suppliers. Ensure a clean transition from test to production systems.
  • Go live. Ramp-up invitations, onboarding, training, transactions – and value!

A simple call to action

Write down the goals for your payments and/or cash flow initiative and a timeline to achieve them. While this may seem obvious, most companies don’t invest the proper time and goal-setting up front, which makes achieving success more challenging and time-consuming.

How we can help

To help you get started, we have resources: an exercise to help you force rank goals and an example of a project timeline. To request them, email SAP_improve-cashflow@sap.com.

Click here for more information about payments and cash flow solutions from SAP Ariba.

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Alan Cohen

About Alan Cohen

Alan Cohen is VP Payments & Financing Strategy, SAP Ariba. Alan has over 20 years of payments and working capital experience as a practitioner, consultant, and banker. In his current role, he leads the payments and financing strategy for SAP Ariba to help clients achieve improved business outcomes. Previously, at Coca-Cola Enterprises, Alan led the procure-to-pay transformation that encompassed sourcing, procurement, and payables automation, and the company became one of the first to benefit from dynamic discounting. Alan holds a supply chain management degree from Arizona State University. In 2015, he was part of a team that won SAP’s Hasso Plattner Founders Award for an innovative approach to B2B payments. Alan lives in Atlanta with his wife and 2 daughters. He has served on the board of the Weinstein School since 2007 and actively participates in 2nd Helpings, a nonprofit to rescue and deliver surplus food.

Scott Pezza

About Scott Pezza

As part of SAP Ariba's Digital Transformation Organization's Center of Excellence, Scott researches, compiles, and shares best-practice information to help SAP Ariba's customers get the most out of their investments. He has a dual focus on the emerging technologies (AI/ML, IoT, Blockchain, etc.) across the source-to-settle cycle, as well as a specific interest in the financial supply chain (invoice management, payments, discounting, and supply chain finance). His research helps inform strategic planning, performance measurement, and program execution. He has spent the past 17 years in the B2B technology space, in roles ranging from software development and support to research and consulting. Scott earned his BA in English and Philosophy from Clark University, his MBA from Boston University Graduate School of Management, and his JD from Boston University School of Law, where he served on the Executive Board of the Annual Review of Banking and Financial Law.