Working capital optimisation using digital process automation solutions
5th November, 2021


In the fast-changing business world, it’s becoming more and more crucial to stay up to speed on the latest trends. Supply chain networks have become more complex, and  the need for greater and improved supply chain technology solutions has become critical. With unprecedented levels of uncertainty, changing regulations, changing customer preferences and increased pressure from competition, this can seem overwhelming for most business owners or managers. Supply chain disruptions and rapid changes in the economic and technological environment is affecting both large and small to medium businesses in equal measures, however the road to recovery is tougher for small to medium businesses (SMBs). This is because small to medium business owners generally tend to focus on their core competence and rely heavily on only a few market segments for revenue generation.


Focus on growth through working capital optimisation

Whilst some small to medium businesses are facing a decline in demand for their product or services, there are others who are currently faced with great opportunity for rapid growth. However, due to limitations in working capital and not having the right foundation for scale they are often faced with major operational challenges whilst they are trying to take advantage of their growth opportunities. These type of businesses often have operational inefficiencies - when it comes to order fulfillment and procurement - that often cost them stress, time and money. Their resources are often stretched thin due to low manpower and capital investments, and this can pose a problem in a tough economy, where there is limited resources and competition for resources needed for sustainable growth.



Rather than focusing on business growth, business owners get consumed in their day to day operations, this is especially true during crunch situations when business owners are more focused on maintaining a positive working capital by staying on top of their accounts payables and receivables than worry about defining a strategy for rapid and sustainable growth.  If these types of businesses are to take advantage of their growth opportunities, they must place greater emphasis on their business strategy, which can only be achieved by having a clear picture of the current and future state of their finances and how they should be allocated to fund growth projects.

Today advancement in digital and automation technologies have provided and opportunity for growth oriented businesses to quickly optimise their working capital by automating customer payment reconciliation, supplier invoice reception and reconciliation, 2-way/3-way invoice matching of payments to suppliers, KPI reporting and may more tasks that are within the order to cash and procurement processes. For example a growth oriented company that was experiencing an increase in the demand for their services, faced the challenge of reconciling complex payments and adjustments against their customer outstanding ledger in their ERP systems. The company needed to reconcile these transactions quickly to ensure that they maintain a positive working capital. This process was time consuming and often resulted to disputes which needed to be resolved quickly to avoid significant backlogs that could result to write-offs and dissatisfaction. By implementing a digital process automation solution that combines Artificial Intelligence (AI) / Machine Learning (ML), Electronic Data Interchange (EDI) / API integration, the company was able to unlock value by accelerating their customer payment reconciliation, allowing them to have a more accurate and up to date visibility of their working capital.

 

Summary

Any decline in cash flows calls for a need to focus on elevating working capital through optimizing cash management. This can be done with Digital Process Automation (DPA) solutions that is focused on optimising cash management along procurement and fulfillment to improve cash flows. The automation of the accounts payable and accounts receivable processes acts as a new bridge between procurement and order fulfillment that streamlines the flow of work between purchasing and sales, providing the business owner with a near real-time and holistic picture of incoming and outgoing cash flows of their business.  This type of the automation enables the business owner to see their working capital at any giving point empowering them to negotiate better deals with their suppliers and buyers that ensures a positive working capital is maintained. 

Introducing Data Engineering

Are you looking for a partner to help you implement a new digital bridge for for rapid and sustainable business growth? Data Engineering is a digital operation services partner that combines design-thinking practices, process, technology, and domain knowledge, to rapidly prototype next-generation software and automation solutions, resulting in quick insights into the size of a return on investment opportunity.

We have partnered with world-leading technology platform vendors and system integrator to help both large and small businesses implement a technology stack required to adapt to the ever-changing business environment. 

Author:


Kelechi Anyaegbu

Founder & Principal Consultant

Data Engineering (DE)





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