Cash Management Automation  - Improving Cashflow and Working Capital

Author: Ritik Agarwal and Amanda Rae

Cash Management has a huge impact on company liquidity and the ability of leaders to make budget allotment decisions based on working capital. Clear visibility into AR and AP processes can be difficult, especially in offices where much of the Order-to-Cash and Procure-to-Pay processes are handled manually. Cash Mangement Automation can help speed up these processes, provide accurate reporting, increase compliance, and improve customer experience. 

Cash Management – Creating positive change in working capital

Percentage of finance leaders concerned about operating liquidity

Cash management processes have a direct impact on company liquidity and net working capital. Especially in this time of economic instability agile accounting is more important than ever.  Gartner reports that over 80% of CFOs have concerns about their operating liquidity. 

According to a Working Capital Study by PwC, 65% of executives named working capital efficiency as the main objective for change management and restructuring activities.

Working capital metrics such as days payable outstanding (DPO) and days sales outstanding (DSO) do not provide insights into ways to enhance cash flow, limiting traditional working capital strategies to negotiating supplier or customer payment terms. Adding Cash Mangement Automation to the mix can be a game changer for increasing speed, decreasing errors, and creating visibility into organizational cashflow.

Speak with a member of our team to discover how Cash Management Automation can improve cashflow and working capital in your organization.

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4 Steps to Cash Management Automation

1) Identify bottlenecks in Order-to-Cash and Procure-to-Pay processes

Step one is process discovery. Finding out where the most time is lost allows companies to identify where the highest ROI will be from process improvement or automation initiative.  

Traditionally this would include recording the time spent, applications used, and process steps for each Order-to-Cash (O2C) and Procure-to-Pay (P2P) process.

Leveraging AI-based process mining tools shortcuts the time it takes to discover the end-to-end process. With current cost data it can calculate the highest ROI processes with the highest automation potential.  

2) Consider Custom Automation vs Prebuilt Solutions

With the outcomes of your manual or AI-driven process discovery you will have the outlines of all the processes currently performed in your organization to be able to start building custom automations.  

For organizations with super niche markets, legacy systems, or international regulatory concerns, this may be the best way.

RPA Custom Development

Finance and Accounting processes do have a standard of best practices that provides a significant amount of overlap from one industry to another. Over many years working with clients in various industries, WonderBotz has become an expert in Finance and Accounting automation. Our Prebuilt Solutions are designed to prevent clients from reinventing the wheel. We can customize the solutions to your specific needs and have these off-the-shelf solutions working in weeks rather than months.

Set up a free discovery call to see if Custom automation or Prebuilt Solutions are right for your organization. 

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3) Cash Application Automation for Order-to-Cash

AUTOMATED CASH APPLICATION PROCESSING

It sounds easy – a customer places an order, an invoice goes out to the customer, they pay it, we mark the money received – Done. 

The truth is there can be many variations in this O2C process that make it challenging for human Accounts Receivable (AR) teams to keep up. Partial payments, missing invoice numbers, various payment methods, and the sheer volume of incoming payments can cause serious impact on your DOS metric.

Our Cash Application Automation Solution receives and interprets customer payments. It then uses Smart Matching technology to match the payments to customer invoices in your ERP. The 10-20% of invoices with exceptions that still need expert handling are flagged to be prioritized for review by your AR staff.  The system then updates all records – including informing the client that their payment has been applied. 

Timely applications of customer payments improves company cashflow and increases customer satisfaction. Using digital workers allows for more speed, less cost, and more scale than hiring an army of human AR clerks. Our last customer was able to reduce cash application processing time by 90%.

4) Automated Invoice Processing for Procure-to-Pay

The AP team manages the other important element of cash management metric, days payable outstanding (DPO). This side of your P2P process keeps suppliers happy, creates additional savings by capitalizing on early payment discounts, and is vital for outgoing cashflow forecasting.  

Each month, organizations receive multiple invoices from vendors in a variety of formats. InvoiceBotz is a best-in-class invoice processing automation tool. It receives invoices from vendors, reads them using OCR tools, validates data, and uploads it to your accounts payable database.

Invoice processing automation solution

Exceptions are flagged for review by your experienced AP clerks. Machine learning is used to capture this instruction and improve the digital worker’s performance when a similar invoice comes in again. In this way your human staff are elevated to reviewers, and managers of high importance takes rather than being bogged down by data entry.  

One of our high-volume clients saved 7,000 annually of AR clerk time processing 50,000 invoices.

Establishing enterprise wide Cashflow Automation

Cashflow management can be complex, especially if you operate multiple sites, branches, or retail stores. Using Cashflow Automation helps organizations track sources and uses of cash by type and location to get an enterprise-wide view of cash management. Cashflow management is a cross-departmental task involving sales, purchasing, and operations in the cash management process. 

Creating end-to-end automation workflows employing digital workers to assist your human accounting department creates: 

  • Faster and more accurate cashflow management processing and reporting.  
  • Clear insights give leaders the data they need for accurate cashflow forecasting.  
  • Releasing cash from inefficient O2C and P2P processes allows the business to increase working capital, invest in product innovation, and increase shareholders wealth.

Use the form below and a member of our team will reach out to you to discuss how to bring Cash Management Automation to your organization.

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