Working Capital Management and Why Your CFO Cares!


Traditional working capital management strategies can strain trading partner relationships. As buyers focus on maintaining or extending Days Payable Outstanding (DPO) and increasing cash returns, suppliers often face extended Days Sales Outstanding (DSO) and cash flow pressure. Ariba Working Capital Management solutions provide new and collaborative approaches that serve the needs of both buyers and suppliers. While providing you with the controls you need to optimize cash use and to realize high-yield, risk-free returns on your payables, Ariba Working Capital Management also provides your suppliers with the visibility and control over their receivables to better manage their cash flow. These features help suppliers get early payment at much lower rates than traditional market resources without incurring debt—and provide greater leverage for you to extend payment terms or negotiate reduced prices.


Do any of these topics creep into conversations where your CFO or finance teams are involved?


  • Driving Systems Improvements
  • Desire to outsource non-competitive operations
  • Extension of Days Payable Outstanding or Reduction of Days Sales Outstanding
  • Fraud
  • Audit and Compliance
  • Corporate Reporting
  • Controls
  • Controlling Employee Expenses


One of the biggest challenges in cash flow management is unpredictability. The other is time. When will a large customer settle what they owe? When will Sales bring in a large new account — and how quickly can this account be up and generating revenue? Working capital management can create tension between buyers and suppliers. While you prefer to hold on to your cash, your suppliers would like to get paid sooner to improve their cash flow. You can resolve the tension by routinely taking advantage of suppliers' early-payment discounts. But those opportunities are often lost in a sea of paper invoices, or bypassed when prevailing cash management strategies call for delaying payment to earn interest on cash balances. Meanwhile, the conflicting priorities can put cash-flow pressure on your suppliers.  Your business growth relies on the free-flow of cash. Yet too much working capital can get clogged up in receivables and payables up and down your supply chain. That can create risks you don't want, for you and your trading partners. Of course, there are ways to collaborate with your cash-strapped partners to set it free, like dynamic discounting or receivables financing. But too many companies rely on sluggish, paper based finance management processes, making it impossible to get the visibility and communications you'd both need to make fast, informed decisions and achieve consistent results.


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