For Jack Pacheco, vice president and CFO at $607 million Smart Modular Technologies Inc., adding a cash flow management tool to his accounts receivable operations has introduced a much needed dose of reality to the company's forecasting. The Fremont, Calif.-based company's collections team had been using an ERP module to keep track of payments across hundreds of customers, but switched to a specialized cash management tool by Emagia Corp. in 2001, adding updates ever since.
Today, the company relies on a 13-week forecast to manage the collections from customers, and with the Emagia tool those forecasts are not only more accurate but more detailed. "It helps manage the collections end and makes sure collectors understand the customer base," says Pacheco. "If cash is not coming in as you think it should, it helps you figure out why and do something about it." He says the product has allowed the company to grow its gross billing revenues by 24% since 2003, without having to add collectors to accounts receivable. One of the biggest appeals of the Emagia platform, says Pacheco, is its ability to integrate with any ERP system. This allows the company to have a common collection platform for cash as it grows, no matter what other ERP systems are added later.
Smart Modular uses its Emagia application mainly for receivables, but the company's products are designed to manage the other two contributors to working capital management as well–inventories and payables. Santa Clara, Calif.-based Emagia recently released a new version of its core cash solution, Cash Flow Performance Management, Suite 6.0. The update includes more extensive use of dashboards and scorecards for a higher level of real-time visibility into cash flows from operations across an enterprise, as well as new analytics for forecasting and key treasury functions involving credit, receivables and payables. "We're focused on reducing the cycle time for order-to- cash-processes," says Veena Gundavelli, CEO of Emagia. "The solution allows executives to set goals for cash flows, based on product, customers or finance employees. It monitors the day-to-day performance and translates the goals into individual tasks for the workforce."
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Other vendors with similar offerings include Aceva Technologies Inc., which sells the Aceva Revenue and Receivables Management Suite, Version 5.5, and GetPaid Corp., recently acquired by SunGard Data Systems Inc., which has its Order-to-Cash Management Solution suite under the AvantGard GetPaid brand.
Emagia's 6.0 version comes with business performance management (BPM) features that allow finance executives to construct models of cash based on multiple dimensions–identifying, for instance, a company's top 10% of its customers by drawing on consolidated information from across divisions and from multiple systems. Users can also model ideal payment terms with suppliers or customers based on the level of cash flow expected on a regular basis. Version 6.0 is a Web-based solution, but it can export data easily into spreadsheet files and then back into the system for ongoing analysis. "In a rising interest rate environment, companies have to make more effective use of cash through better portfolio management," says John Van Decker, senior vice president and principal research fellow at Robert Frances Group, an IT business advisory group based in Westport, Conn. Companies can do this with legacy or ERP systems, but the job becomes far easier when it's integrated by a single solution, he says. "What's unique about Emagia is that it has a lot of BPM in it, so it helps get to the right folks in an organization who manage cash, through a workflow process."
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