While the fears of economic uncertainty and global recession are grappling every business amid the COVID-19 pandemic, focus on cash flow – managing risk, maximizing liquidity from receivables and optimizing working capital – has become paramount for every business – big or small. Revenues and profits are secondary. Cash matters most and will define the survival plan and strategies go-forward in the near future.
CFOs, treasury and order-to-cash teams are now defending their business health from the COVID-19 impact much like those front-line doctors and healthcare workers saving people’s lives during this pandemic. Last few weeks have been incredible – how the back-office finance in almost all global companies, has responded so strongly to the biggest disruption and switched swiftly to “work from home” to maintain business continuity. Now its time to use every tool you have to steer your cash flow and your business through this storm.
The true test of leadership is how well you function in a crisis.
Here are eight imperatives we believe can help global receivables process owners and treasury leaders in managing their operations during this period of remote working and of rapid economic uncertainty.
1. Connect, lead and inspire your remote workforce: If any of your team members are infected by COVID-19, offer support and resources to help them take care of their health. Business continuity is the most important aspect during this time. Ensure IT support to get your team members the necessary access to core financial and order-to-cash systems to work from home safely and securely. Manage daily meetings using web conferencing. Your leadership is at test now. Building a purpose, goal setting and communication are very critical. Managing your remote workforce and helping them balance personal priorities and corporate priorities at these times is very important.
2. Leverage digital tools to minimize manual activities: Your workforce productivity as well as your customers attention will be much lower now and you need to find ways to lower the burden on them. Minimize manual activities and find digital alternatives for manual credit application processing or manual entries from checks,remittances, or lock box images. Make sure you automate the reminder letters and provide mobile payment options. Leverage the automation tools and communication tools you have to the best and explore functionality you have ignored so far in these tools. We are here to help you during these times and we have opened free access to our cloud-based productivity tools – credit, collections, cash applications, mobile payments – and help at www.emagia.com/covid-19/
3. Mitigate enterprise risk using a data-driven approach: Having daily visibility on your global customer credit portfolio, assessing and understanding the overall risk is important. Factor in the impact of COVID-19 – industry, country, region and others. For every new customer and also for credit line extensions of existing customers, ensure tighter control on the credit granting process. Setting triggers on your portfolio will help you monitor, manage and refine your enterprise risk strategies dynamically during the pandemic. Stay alert to changing dynamics and risk conditions.
4. Focus on maximizing cash flow from receivables: It’s time to reach out to your customers for payments, so put the rigor on your global collections processes but with a very sensitive localized approach. Remember, your customers are also experiencing the pandemic. Focus on your collections strategy with a customer-specific approach. Pay attention to their past payment patterns and watch out for any changing trends as many companies will delay accounts payable during these times. Leverage tools for sharing collections prioritization with your remote workforce, for sending mobile-friendly correspondence to your customers.
5. Tighten upstream processes like order processing and billing: Minimize billing errors by automating orders and billing to avoid costly cash flow problems. Stay on top of disputes to understand root cause and minimize the time to resolve them. Self-service customer portals, online payment options and dynamic discounting are useful tools to leverage to the max during these times.
6. Manage and expedite cash application: Visibility of cash receipts and cash application efficiency is important during this time. Manual data extraction from check copies, remittance advice, or lock box images can be time consuming and cumbersome for your remote teams. Leverage simple cloud-based remittance data gathering bots, OCR and data extraction tools that can help expedite cash application and bolstering liquidity management.
7. Sharpen focus on cash flow projections: Leverage AI and predictive analytics tools you have. Gather daily updates on collections, receipts, disputes, broken promises to pay and related data. Your data is your goldmine. Short term rolling window forecasting will be a good way to put tight focus on managing receivables turnover performance. Communicating collections goals to your teams and staying close to understand collections risk is important.
8. Become a partner to your C-suite and business leaders: Stay close to your CFO, treasury and business managers and provide timely reports with relevant data and help in working capital planning and business planning. Revising expectations on financial performance and communicating risk is what the business leaders are grappling with. This is your time to become a strong partner in strategic business management.
Digital tools – automation, analytics and AI – will help you during these times to stay in control. Leverage these tools in all ways possible to stay in control. For CFOs and treasury executives who have been sitting on the sidelines till now on digital order-to-cash transformation, this is a wake up call.
Look forward, stay strong and lead with confidence.
As technology partners, we are here to help you during these challenging times. Emagia has a very clear purpose to help businesses run their order-to-cash operations better so they can be stronger. Right now, more than ever, we are leading through our purpose. We believe that opening access to Emagia order-to-cash AI tools is a clear way we can help the order-to-cash community. Get your free cloud-based productivity tools for – credit, collections, cash application, cash forecasting – and expert help at www.emagia.com/covid-19/. Lets lead together.