The acceleration in converting sales to cash is reshaping the financial landscape for emerging enterprises. These companies, with revenues ranging from $250 million to $2.5 billion, now view the time to cash as an essential aspect of business velocity, not just a backend metric. This transformation is largely driven by the evolving role of Chief Financial Officers (CFOs) who are increasingly responsible for decisions impacting cash flow and liquidity, aligning business and financial strategies.
In recent years, the shift towards automation and artificial intelligence (AI) has been a significant factor in this area. Jeff Feuerstein, SVP of Paymode Product Management and Market Strategy at Bottomline, highlights the ability of technology to move beyond offering insights to making decisions, a development seen as pivotal for finance leaders. The expectations for reliable and transparent transactions have solidified CFOs’ roles in these efforts. Historically, changing CFO roles have taken a central place as companies moved to technologically driven finance operations, adapting to modern techniques for managing cash flows.
Why is Supplier Readiness a Core Issue?
Cash flow can falter when suppliers are unprepared for payments, according to Karen Webster. She emphasized that the initial stages of receivables, such as onboarding and data readiness, can create bottlenecks if not handled properly. Prashanth Ravishankar, SVP for Coupa Advantage and Supplier Offerings, reiterated that supplier readiness for payment is far more than being ready to conduct business.
How Does Onboarding Impact Time to Cash?
Onboarding is crucial for reducing the time to cash, as suggested by Ravishankar. Coupa’s expansive marketplace aims to eliminate early transactional barriers by automating supplier onboarding. This process ensures that buyers can trust incoming invoices, thereby creating a smoother transaction process.
Automation in invoicing and onboarding also increases transparency and confidence among buyers, facilitating a more predictable cash journey. Paymode-X, offered by Bottomline, supports this by providing a network of authenticated suppliers, reinforcing trust between buyers and suppliers.
Pamela Novoa Ralli of FIS highlighted the growing importance of data-driven approaches in meeting evolving customer expectations. With clients now expecting highly accurate analytics and real-time insights, firms are pressured to integrate both speed and control into their processes.
Despite technological advancements, inertia remains a common barrier to optimizing cash processes, as stated by Feuerstein. Many businesses are tethered to manual and paper-based systems, hindering their evolution due to outdated processes. Transitioning to automated workflows can reduce delays, though it demands a strategic shift in mindset.
Manual intervention also creates significant friction, delaying payments and complicating forecasting. As Ravishankar pointed out, balancing unified system integration with specialized tools is complex, but essential for attaining end-to-end oversight. Businesses need to develop a data hub for greater visibility, despite the challenge in achieving perfect ecosystem integration.
The PYMNTS Intelligence reports indicate that while the majority of CFOs are advancing in handling time to cash, some firms continue to lag due to outdated methods. Investment in both technology and process restructuring is necessary to modernize operations. Real-time forecasting tools and dashboards, as mentioned by Feuerstein, can enhance visibility and accuracy in financial reporting, fostering better cash management.
AI plays a crucial role in this context, delivering substantial returns on investment. As firms become more comfortable with AI, they can incrementally expand its use, leading to increased efficiency in onboarding and supplier verification. Enhancing data standardization and orchestration will be vital for future developments, as identified by industry experts.
