Part 2 of the Payments and Cash Flow Series
“Goals that are not written down are just wishes.”
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|
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_improvefirstname.lastname@example.org.
Click here for more information about payments and cash flow solutions from SAP Ariba.