By Wimley, C. J.
Business Credit , Vol. 109, No. 9
In a recent study published by Aberdeen, titled Technology Platforms for Supply Chain Finance, the burden of manual-intensive processing of financial transactions was ranked as the top pressure driving an increased focus on Supply Chain Finance (SCF) technology. Historically, the accounts receivable and accounts payable functions have been extremely manual and paper based. As a result, companies have been challenged by lack of resources and visibility causing poor cash flow, increased operational costs, inaccurate forecasting and higher bad debt expense.
During the past decade, solutions to help manage these issues have evolved, first through basic automation of specific functions such as collections and deduction resolution. Eventually, these solutions progressed further and became more holistic, and today most companies view the order-to-cash (O2C) process as a single and complete function.
However, emerging trends in technology demonstrate that companies are looking for far more than pure automation of the O2C cycle. Today's technology must be capable of integrating the many disparate players in an ecosystem of suppliers, buyers, banks, data providers and other trading partners. Companies now recognize that they need a centralized hub that offers optimization of processes and workflow, as well as connectivity and collaboration. With a focus on data consolidation, process optimization and visibility, supply chain finance solutions are gaining traction in the marketplace.
"We are migrating from a decentralized credit and collections operation to a shared services center environment to help us gain visibility into our global receivables across five business units while helping to eliminate our manual processes," comments Dave Maxey, Input/ Output's treasurer and vice president of tax. "A centralized repository of data and a systematic approach will help us to more effectively manage and consolidate our credit exposure and more easily track and report on our outstanding receivables."
As the role of the finance and credit professional migrates from a purely back office function to that of a strategic partner, there is even greater demand to connect the dots across the financial supply chain. In this environment, organizations are less focused on hierarchy and protocol and are increasingly more fluid. The treasury, finance and accounting function now works closely with sales, customers and trading partners to facilitate relationships and maximize a company's profitability.
As organizations look to the future, they are looking for centralization and collaboration, both internally and across the ecosystem. The following discusses some key technology trends relating to electronic invoicing and settlement, clearinghouses, document management, exception processing and dashboards.
Electronic Invoicing and Settlement (EIS)
By automating the financial supply-chain, companies can facilitate workflow and data exchange more effectively. Areas of focus include payment delivery, related documentation and information exchange between the ecosystem of buyers, suppliers, financial institutions and other trading partners.
The most widespread technologies to automate financial supply chain transactions today focus on automating various stages of the accounts payable (AP) and accounts receivable (AR) processes. These technologies include automation and management of credit risk facilitation, collections, deduction management, auto-cash processing, document management/data capture, exception processing and electronic invoice presentment and payment (EIPP) with system-to-system integration across buyer-seller ERP systems and their banking partners. Emerging technologies aimed at electronic invoice and settlement (EIS) are now beginning to gain traction.
More companies seem ready to rely on external, pre-configured solutions to automate processes, improve data integrity, manage the systems and perform other select roles. …