Delivering for your CFO

By Ekta Mody - July, 19 2021
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Digitizing global OTC and P2P operations to drive improved cash reporting and treasury efficiency.

 

CFOs are under constant pressure to deliver for the many stakeholders of their organizations. This includes shareholders, internal employee stakeholders, along with suppliers and customers.

In a complex world, simplification and self-service initiatives achieved through digitization provides real opportunities to reduce pressure on the CFO whilst improving on KPIs.

Global Shared Service Centres are operated by many MNC’s now to perform O2C (Order-to-Cash) and P2P (Procure-to-Pay) services. These are the engine rooms of cash collection and payments, processing billions of dollars of trade receivables, and payables, all focused on the smoothing of cashflow, cash forecasting and ultimately ensuring that working capital requirements are met.

The performance of these shared service centres can be highly variable depending on the countries and markets they operate in, the customer type, and of course the teams performing that function. Ultimately, this range of co-dependencies can create uncertainty for the treasury function which feeds upwards to the head of treasury and the CFO.

Comms tech

Early generation of O2C and P2P solutions- have delivered some improvements in the function of cash collection and supplier payments. However, despite cost reduction pressures, the Treasury function remains substantially stuck with high overheads and fluctuations in cash. A strong dependency on the management and the performance of shared management centres in different geographies further adds to the pressures.

Contributing to this is the varying levels of P2P/O2C penetration due to inefficient technology which drives the deployment complexity of these solutions. As a typical example, one large MNC has using such technology has achieved only 3% penetration of P2P into their suppliers after 12 months.

The Crossflow Difference- Digitizing this environment with a service such as Crossflow enables the cash fluctuations in O2C and P2P to be smoothed considerably, and cost reductions to be achieved. This is enabled by the ease of deployment of Crossflow with customers and suppliers, with programmes rolled out and operational in a matter of weeks, and managed through Crossflow rollout teams. Different user interface designs are also supported enabling a smooth transition to Crossflow from other services.

Costs

Crossflow O2C Improvement- Use of O2C is often limited by the cost of capital which can be higher than the corporates typical cost. Crossflow enables corporates to use O2C as required to support treasury operations, and does not require that all trade receivables are financed, reducing overall costs along with crucially supporting the delivery of cash targets.

In addition, the cost of financing O2C is achieved competitively through the Crossflow marketplace. This marketplace technology includes sophisticated algorithms which selects the lowest cost of funds from Crossflow’s pool of institutional funders, within a competitive environment. These funds may be from hedge funds, pension funds etc who are looking to achieve some yield, however low, on their unutilised funds, delivering a further advantage to the corporate treasury team.

This functionality can be used on demand by the corporate, increasing the access by the corporate to cash for trade receivables at optimum cost, smoothing O2C cash flows.

Crossflow P2P Improvement- In a similar way, extending the penetration of P2P, reduces demand on the corporate for faster payment by using Crossflow as an enabler for suppliers seeking faster payment. This is a crucial capability as due to covid, cash starved suppliers are increasing demands for faster payment on their corporate customers, or even worse reducing product availability as they do not have cash to purchase raw materials to fulfil customer orders.

Compliance and rules

Overall, Crossflow enables a strengthening of compliance and control across vendors, contracts, regulations, buyers, and accounts payable. As inflation increases, this enables treasury to play a key role in supporting stronger price negotiations with suppliers and better bargaining power.

Next Steps- The advantages of improving cash management and treasury outcomes through Crossflow is significant. Increased penetration, catering to specific needs and variability of the markets, demographics etc, enables treasuries to also leverage these for cost optimisation goals. This ultimately meets with the goals of the CFO’s and stakeholders at large. Crossflow assists in bringing about this transition offering a whole new world of digitisation.

Contact us  to book a session with one of our experts at Crossflow to know more.


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Ekta Mody is Head of Consulting at Crossflow. She has extensive experience in the field of Corporate Treasury and Risk Management within large global corporates. With a forte in cross-border fund raising & structured lending, Ekta is proficient at identifying risks and implementing solutions related to funding programmes. She brings her experience to Crossflow as a key leader in the global Corporate Engagement team.

 
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