financial management: virtual consortium study - apqc · financial management: virtual consortium...

Financial Management: Virtual Consortium Study

Improving Working Capital Management and Cash Flow Intelligence

2©2009 APQC. ALL RIGHTS RESERVED. 2

Recovery: Macro Matters

Double‐dip recession unlikely

But U.S. GDP growth stays weak

Unemployment rate stays high

CFOs cannot predict demand

CFOs remain risk‐averse

Cash cushions offer agility and advantage


Will work for cash…

Game over: no more “easy” money

Impact of bank reform on borrowing

Rates now tied tightly to default risk

CFOs want to reduce need for external funding

To instill confidence, CFOs must improve ability to predict and model cash flows


Working Capital Management Defined—The Treasury Dimension

What bills to pay when?

When will deposits hit the bank?

How to cover your checks until deposits hit the bank?

Pull cash out of investments? Borrow?

Is there too much idle cash in the bank checking account?


Working Capital Management Defined—The A/P and A/R Dimensions

Optimizing discountsManaging trade credit riskProcessing invoices and receivablesMaking or collecting paymentsAccounting for payments or receivablesEnsuring strong controlsImproving workflow Analyzing cash flow patterns for gain tactical and strategic advantage


The ROI of Improving the Management of Working Capital

Do more with less

Speed cash conversion

Liberate cash trapped in operationsDecrease that DSO!

Decrease invoice errors/disputes

Seize pre‐set discounts

Boost intelligence about cash flow impacts


Good vs. Bad Working Capital ManagementWide disparity within industries exists.Example: Household products, nondurable

2007 Days of Working Capital & Annual ChangeDays Change

Clorox 33 6%

P&G 37 ‐3%

Colgate 47 6%

Median 59 3%

Worst 121 1%

CFOMagazine, October 2008


Challenges to Sound Working Capital Management

Working capital management straddles Treasurer’s and Controller’s shops

Lack of systems integration

Lack of common goals/accountability

Priorities are not aligned with strategy

Cross‐functional collaboration needed

Operating managers don’t see the ROI


Working Capital Management:

Virtual Consortium Study


Our Goals

To help organizations optimize working capital in their operations

To enable organizations to improve their Cash Flow Intelligence

To show companies that investments in working capital management have a direct impact on the bottom line


Study Methodology

All virtual

3 virtual site visits

1 virtual knowledge transfer session

Detailed questionnaire driven by our Open Standards Research Database

3 case studies

1 final report


Process Classification Framework (PCF)

Where does WCM fall in terms of the PCF?

8.0 Manage Financial Resources8.2 Perform Revenue Accounting

8.2.1‐ 8.2.5

8.6 Process Accounts Payable & Expense Reimbursements

8.6.1‐ 8.6.2

8.7 Manage Treasury Operations

8.7.2; 8.7.4 ‐ 8.7.5

www.apqc.org/pcf

http://www.apqc.org/pcf


Study Scope

Vision and Strategy for Improving Working Capital Management

Analytics and Measures to Enable Better Working Capital Management

Performance Management Principles and Measuring Process Improvement

Information Technology Strategy and Application


Vision and Strategy for Improving Working Capital Management

What does the C‐suite hope to achieve by committing resources to the improvement of working capital management?

What does the path to progress look like?

What’s in it for key constituencies (example: capital providers)?


Analytics and Measures to Enable Better Working Capital Management

How do leading organization measure their processes?

How are key measures used to guide decision‐making by operating managers?

What do leading firms analyze in this space? What do they gain from this?


Performance Management Principles and Measuring Process Improvement

How can senior management enforce cross‐functional collaboration?

How to make sure that what goes on at the process‐level (example: billing) supports key strategic goals (example: improving the customer experience)?

How do leaders monitor process performance?


Information Technology Strategy and Application

How do leaders craft an effective IT strategy for improving working capital management?

How can information technology solutions boost process performance?

How do leaders apply IT solutions effectively?


Project TeamAlex Hawkins, Project Manager, APQCMary Driscoll, Internal SME, APQCKen Parkinson, External SME

Former Treasurer, NYU Professor, AuthorProtiviti, Research Champion

Protiviti is a global business consulting and internal audit firm composed of experts specializing in risk, advisory and transaction services. The firm helps solve problems in finance and transactions, operations, technology, litigation, governance, risk, and compliance. Protiviti’s highly trained, results‐oriented professionals provide a unique perspective on a wide range of critical business issues for clients


Best Practice Partners

General Mills

Owens‐Illinois

Zappos.com


Sample Our Research!

Working Capital Management Survival KitBundle of APQC’s current research in WCM

www.apqc.org/WCMSurvivalKit

http://www.apqc.org/WCMSurvivalKit


Questions?

Contact: Alex Hawkins, Project [email protected]

+1‐713‐685‐7205—Direct

Or visit the study’s webpage:www.apqc.org/WCM2010

mailto:[email protected]

http://www.apqc.org/WCM2010

financial management: virtual consortium study - apqc · financial management: virtual consortium...

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