Part 3 of the Payments and Cash Flow Series
Imagine that you’ve developed a fantastic program to improve payments and cash flow, but you’ve neglected one key component: You haven’t gained executive support.
Your program may never get off the ground.
Executive support is crucial for many aspects of a successful program: goal setting, investment approval, resources allocation, meeting deadlines, and achieving goals. Cash flow initiatives are typically sponsored by the CFO with a combined focus on metrics (such as a $100 million cash flow improvement) and outcomes.
The value of outcomes can’t be overestimated. Here’s a partial list of investing options for this free cash flow:
- Build a new plant
- Open a new store
- Refurbish an existing store
- Invest in research and development
- Pursue merger and acquisitions
There are other stakeholders who must be consulted. Payment and cash flow/discount initiatives are often supported by leadership in procurement, treasury, and accounts payable. Procurement owns supplier relationships and should be involved early as a collaborative partner in these initiatives.
Day-to-day responsibility: Successful programs require accountable leaders. Choosing the right person to lead the initiative is critical for achieving the desired goals. Focus more on their skill set than on the functional group they support.
The ideal candidate will have existing relationships within the company, can sell the program internally, be innovative and results-oriented, act as a change agent, and work as the trusted link between executive leadership and the project team.
Project team: A cross-functional team is required to execute a payment and/or cash flow initiative. Each person is vital to the overall success of the initiative:
- Executive sponsor. Executive leadership, governance, goal setting, and resourcing
- Program manager. Strategy definition and execution, ongoing program support, program growth plan, and executive readouts
- Procurement lead. Supplier communications and payment terms negotiations (when appropriate)
- Accounts payable lead: Support for supplier outreach and vendor master updates
- Treasury lead. Payment type and terms strategy, hurdle rate or cash flow goal setting
- IT: Connectivity, integration, data uploads, and setup of payment terms/types
Call to action At this stage, you need to identify and formalize two key stakeholders:
- Your champion – executive sponsor. Ensure that there is a clear executive sponsor who is committed to the initiative’s success. (Note: Estimating value to help gain executive support is the focus of the next blog in this series.)
- Your day-to-day lead – program manager. Identify a list of candidates who can take ownership of and lead the initiative. Ideal candidate characteristics are referenced above under “day-to-day responsibility.”
How we can help
To help you implement the call to action, we have a Project Team Overview that highlights the team structure, skill sets, and time commitment required. To request it, email SAP_improvefirstname.lastname@example.org.
If you could benefit from a working capital management improvement program or have one underway, consider attending the Treasury & Risk complimentary webinar on August 30. You will hear a panel of analysts and experts share best practices, KPIs, and key strategies for managing working capital in a rising interest-rate environment.