Challenges and Impacts of Today’s Financial Flows

Image

Are financial flows impacting  eCommerce?

Financial flows are still performing as they did in the 1970s, with significant delays in processing and reconciling invoices, long Days Sales Outstanding (DSO) for accounts receivable, and excessive funds held in working capital to deal with uncertainties in inflows and outflows.

B2B businesses are deploying B2B platforms at double digit rates.  Increasing volume of business need not be impeded by the financial flows. Many B2C companies have already
been subjected to these frustrations.

Today’s systems and processes for payments, invoicing, and transaction management are impediments to continued progress in supply chain optimization rather than enabling technologies.  They are slowing rather than accelerating time-to-market; they are increasing cost and risk; and they are preventing companies from achieving their full revenue and profit potential.

It is the financial flow that determines the pace of the entire business cycle.  Information and Material would be the other two flows in the chain.

What are the three key inefficiencies that have not been overcome: 1. time, 2. visibility, and 3. cost.

The financial flow in a typical supply chain is a complex labyrinth of manual and custom processes, handling potentially hundreds of thousands of invoices and payments in a given year. The cycle involves extensive paperwork, including requisitions, purchase orders, receiving reports, remittances, and payment approvals – and the costs can end up exceeding $100 per transaction.

Solutions include:

Real-time payment processing and settlement

Visibility

Transparency

Does one day’s delay matter?  A company receiving $250 mil a year in payments or $1 mil each business day with a cost of funds at 10%; the delay of a day is worth an annual $100k. A typical $1 billion company has $148 mil invested in Working Capital.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s