Have you been thinking about optimizing your working capital strategies like a vast majority of the financial leaders (82 percent) who attended Kyriba’s recent webinar on “How CFOs Can Lead Working Capital Efficiency”? Are you wondering about the different business use cases for deploying a working capital program, or unsure how you would structure such a program, including which suppliers to target?
If the answer to these questions is a big YES, then you are in line with the general consensus among our webinar audience about the importance of defining program targets, cross-functional alignment, program training, and supplier on-boarding at the outset of program. The webinar was held in November, and feature The Hackett Group and Fluor Corporation, based in Irving, Texas.
Implementing a successful working capital program can play a crucial role in creating significant value for a company either through improving the free cash flow (via reverse factoring program) or improving EBITDA and providing superior short-term return on surplus cash (through dynamic discounting).
The quest for the right technology partner often focuses on those who can deliver a secure, scalable platform that can support complex ERP integrations, as well as multiple currencies and languages. However, organizations should also look at the services a vendor can provide, including the expertise to design and implement a program that is focused on clear business objectives. In the absence of these elements, a high-potential program could become victim of unclear targets, internal mis-alignment of stakeholders, and weak execution of supplier on-boarding. No matter how good the technology, the services component of a working capital program is absolutely critical, which is why Kyriba makes it such a focus. Kyriba strives to deliver both best-in class technology and expert services to ensure program success. While enhancing the technology, we recognized the importance of these service components and created four distinct pillars:
- Estimate (working capital analysis) – Hypothesize the value of a working capital program (cash flow gains or annual percentage return (APR)) and categorize suppliers based on individual supplier analysis.
- Design (customized program design) – Outline program parameters such as realistic target payment terms/rates, roles and responsibilities, supplier meeting process, negotiation strategy, and more.
- Train (procurement program training) – Educate and provide data, tools and processes to procurement resulting in internal buy-ins and successful negotiations with suppliers.
- Execute (supplier on-boarding) – Undertake integrating of suppliers on platform.
Fluor selected Kyriba because of its dual approach to services and technology. Kyriba performed an upfront working capital analysis for Fluor where its experts examined the organization’s individual suppliers under the lens of different kinds of potential cash flow gain opportunities (buyer-specific, benchmarks and break-even comparisons), not just against the suppliers’ cost of capital. In addition to the technology, Kyriba is also handling end-to-end supplier outreach and enrolment through a customized marketing website, CRM tools and a dedicated supplier on-boarding team.
Technology is a crucial enabler in any working capital program. However, it is essential to look beyond technology to services that help estimate, design and implement a program that keeps business objectives at the core.