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Road Map out of the A/P Silo

How companies can use objective data and cross-functional collaboration to transform treasury and payments strategies.

By Sandra Larin | Updated on October 01, 2014
Road map to funds

In today’s increasingly complex and competitive marketplace, businesses need to ensure that every dollar flowing through the cash conversion cycle moves as quickly and as efficiently as possible. This need creates an opportunity for treasury teams to elevate their strategic significance, but it also requires them to step back and rethink how their function’s goals, actions, and processes resonate throughout the company.

Such a comprehensive evaluation of the impact of the treasury function creates new opportunities for treasury managers to integrate their activities with those of other key stakeholders within the company, and to ensure that they are collaborating in ways that support the broader organization’s key goals. When it comes to improving cash flow and working capital, the natural partners for treasury to collaborate with are the payments and procurement teams. The integration—both strategic and tactical—of procurement, treasury, and payments can benefit the organization as a whole. But successful integration requires all parties to consider their role within the context of the broader company.

To understand why the current relationships among procurement, treasury, and payments often fall short of optimal integration, consider the key performance indicators (KPIs) each group uses to measure operational success: Payments teams often track days payables outstanding (DPO), while procurement may judge its success by looking at total cost savings through price negotiations and treasury might measure risk management, returns, and/or internal-processing efficiencies. All constituents may be working toward the common goal of improving working capital, but they need to align strategically and operationally in order to fully optimize business-wide income statement and balance sheet results.

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