Optimising Cash Flow & Surviving Change Through Technology Innovation: A HighRadius Perspective

Finance and A/R learnings on the role of technology on business health through a crisis

COVID +3 and ‘normal’ isn’t happening anytime soon. A survey by Global Crisis Monitor indicates that financial normalcy can be expected in 11 months [from May] - that has extended from 8 months reported in the previous month. Clearly, it can be called out that COVID-19 has initiated a stress management test for the finance and A/R teams. With the complete disruption in current operations, every senior finance leader has one key priority to focus on: IMPROVING CASH FLOW. Various factors impact cash flow, however, and 100+ CFOs and senior finance leaders told us in a recent HighRadius survey about their most significant business challenges currently: Clearly this has been a worrying time. Atradius are reporting that there will be a 2.4%increase in corporate insolvencies, so unsurprisingly finance teams have become more cash-driven than ever as they pivot to operate in a protect-and-preserve environment.

Cash is King: The Impact of Receivables on Improving Working Capital

As organisations are moving from a ‘survive to thrive’ phase, it is important to understand the cash positions in the short-term as well as on a long-term basis. In a recent panel discussion with CFO Virtual Agenda and HighRadius, Guillaume de Pommereau, the former CFO of Hitachi Europe commented that ‘Cash is like oxygen to every business’. HighRadius Executive, Gwyn Roberts emphasized that liquidity is the key and from a receivables angle, organisations are seeking ways to bring cash quickly into their business. The pressure is on A/R teams but many still rely on manual and spreadsheet-based data analysis to do this.

Role of Technology in Unlocking Cash Flows

Even in 2019 BC(Before COVID), organisations accepted some inefficiencies in finance processes but perhaps didn’t understand their impact...until now. In a survey carried out during the CFO Virtual Agenda, almost 30% of senior finance executives revealed that they have identified order to cash automation as a necessity as an aftermath of COVID-19. Automation focused on manual repeatable processes frees up resources to focus more on strategic tasks. Gwyn shared an example in this context: Cash allocation is one such process that is usually manual. We have to think that if someone is spending 3 hours posting cash, how can we add more value to his job by replacing the basic manual tasks. He added that where automation can drive volume and speed, there is an industrious and productive space where humans and machines co-exist. For AR teams, the following use cases show how working symbiotically can result in a greater business outcome.

• If a collector can see the timeline for some incoming customer payments, he or she can prioritise those most likely to default.
• If credit teams can predict an upcoming order block this enables them to work proactively with the other stakeholders such as sales to recover some or all of the sum owing.
• If the deductions analyst gets to know the validity of a deduction, it will be easier to resolve disputes and recover past-dues from the big box retailers such as Amazon, Walmart, etc.

For finance leaders, AI technology and analytics can drive visibility and decision making. Access to real-time graphical data around where there is a high degree of outstanding debt along monitoring and alerts around critical KPI’s is crucial at a time when agility is needed. This powerful combination of humans and machines can significantly help finance teams to control their DSO and bad debt driving a greater contribution to the improvement of cash flows.

Staying Ahead of the Crisis with Robust Cloud-Based Technology

The panel commented that everyone is wondering when the lockdown will start to ease out but are they considering the possibility of a second wave of crisis? The answer is: no one really knows so there are a number of scenarios organisations need to plan for. In a poll accompanying the event, 26% of the CFOs and Heads of Finance attendees revealed that they need to address a robust infrastructure, access and adopt order to cash cloud solutions to make homeworking easier. It is clear then that the flexible working environments will continue driving a shift in the type of technology and solutions needed to do business. SaaS solutions have certainly proved their worth and are more attractive as a result.

• A subscription-based service minimizes any upfront CAPEX expenses that could be out of the question for many companies currently
• Rapid deployment means that your team can be up and running quickly and you will see a shorter time to value
• Implementation can be done efficiently by remote workers from the solution provider
• Easy access, and simple navigations along with online tutorials making the onboarding easier

Gwyn added that HighRadius has been able to conduct complete remote implementations for customers simply because all our solutions are cloud-based. The panel also went on to comment that this reinforces the role of cloud solutions in concepts such as agile finance. The pandemic has shifted the economic axis and created new scenarios but has it carved out a new way of working and shifted focus towards new business models? The panel suspects that adoption of SaaS solutions and innovations like AI will increase as they may just have proved to be the valuable buoyancy aid that have helped to keep some companies afloat. Gwyn agreed and revealed that we have seen a 4X increase since March in the amount of enquiries relating to how to optimise the order-to-cash process.

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