the working capital success guide - leveraging technology to effectively increase the value of cash

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TheWorking CapitalSuccess GuideLeveraging Technology to Dramatically Shorten the Cash Conversion Cycle & Increase Return on Cash

Craig Himmelberger, DirectorSAP Treasury Solution [email protected]

Steven Pateuk, DirectorAriba Channels [email protected]



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“Working Capital Performance Deteriorates in 2012…• Opportunity now tops $1 trillion – Hackett Group

• Working capital +6% last year, and +25% over the last 3 years



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Volatility and restricted liquidity have companies in a vice• Companies need better cash visibility and forecasting

• Companies need better control over payments and collections



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Companies gain by connecting Treasury and Operations• Working Capital systems can better inform cash planning

• Better cash information enables better business decisions and actions



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Suppliers

Receivables

Buyers

Payables

Treasury Department

Financial Risk Management

Debt / Investment Management

Cash Management

BanksBanks

Payables Receivables

Payments Receivables



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Suppliers

Sales

Order Mgmt.

Receivables

Buyers

Sourcing

Procurement

Payables

Treasury Department



Cash Management

BanksBanks





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SAP and Ariba Business Performance Benchmarking – By the Numbers

Established end of 2004

Complimentary service

Available to SAP and non-SAP customers

Overview

Reach

ContentCoverage

Over 15,000 participants from over 4,000 companies

Global in scope

Partnerships with ASUG and other user groups

Studies available in 12 languages

Over 50 business process assessments

Over 1,200 KPIs, over 5,000 Best Practices

Over 300 peer groups



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Percentage of companies with online forecasting models that regional and global organizations use to analyze current and historical cash flow trends

Source: SAP Performance Benchmarking

Better visibility and forecasting of cash enables companies to stay ahead of volatility and take control of their liquidity and business planning.

Companies are always seeking more accurate and timely information in their cash reporting and liquidity planning

Traditional cash management systems are not well-integrated to operational business systems where better information exists

Working capital decisions often have to be made with absent, imperfect, or inaccurate business information

13%



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Savings compliance & discount opportunity capture when invoice processing is automated and finance operations & treasury share networked data collaboratively

Source: Ariba Performance Benchmarking

Strategic utilization of working capital enables companies to finance operations at lower costs and with better returns.

It’s estimated that for every billion in revenue, companies maintain an average of $126M in excess working capital. Hackett Group

Confident and reliable liquidity projections can be used to drive systematic discount capture and optimize collections

Companies can finance improvements via procurement savings, increased investment income and reduced borrowing costs

95%



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The Rise of the Networked Economy



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Businesses Struggle with Collaboration

© 2013 Ariba, Inc. All rights reserved. 11

Wasted Time and Resources

Higher Operating and Supply Chain Costs

Missed Sales Opportunities

Manual Paper-based CollaborationPoint to Point EDI, Portals & Single Process Solutions

Delayed Payments, Overpayments, and Missed Discounts, Slow Cash FlowLimited Visibility and Elevated Risk

Buyers Suppliers



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“65% of Best in Class companies have the capability to effectively collaborate with their network of suppliers versus only 21% of laggards. ”

SuppliersBuyers

Business Networks Facilitate Collaboration Between Trading Partners and Between Silos



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Take Advantage of Working Capital & Dynamic Discounting Opportunities

Significantly Increase supplier participation by in early payment discounting.

Capture existing discounts currently missed due to inefficient processes

Achieve greater return on short term cash invested in early payment

Improve working capital metrics of DPO and/or DSO

$2+m Discount savings per $1 Billion spend

Source: Ariba Performance Benchmarking

Better Working Capital & Discount ManagementBenefits



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Establish Collaborative Finance Processes

Reduce exceptions and improve efficiency of and visibility into financial processes.

Take advantage of new early payment discount opportunities to increase savings and return on cash.

Improve working capital performance through increase DPO and reduced DSO.

Capture negotiated contract savings leakage through automated, networked compliance to terms.

$10mSavings per $1 Billion spend captured by automating the invoice to pay process

Source: AribaPerformance Benchmarking

Better Collaborative Finance Management (AP/AR)Benefits



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IntercompanyConnectivityAnd OtherNetworkAdapters

CXMLEDI

SupplierPortal

PaperInvoice

Suppliers

Sales

Order Mgmt.

Receivables

Buyers

Sourcing

Procurement

Payables


Treasury Department



Credit Mgmt.

Collections &Dispute Mgmt.

Cash Management

BankCommunication Mgmt.

In-House Banking

BanksBanks




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Award Winning Approach…

16

Best Working Capital / AP/AR Solution

Best Cash Management Solution

Best Process Re-engineering Solution

http://treasurytoday.com/adamsmith/2013/winners/adidas-group-winner-best-process-re-engineering-solution

http://treasurytoday.com/adamsmith/2013/winners/novartis-winner-best-cash-liquidity-management-solution



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Proven Benefits of Networked Collaboration

>4,500 global suppliers networked enabled

98%+ touchless invoicing -- integrated with8 ERP systems worldwide

96%+ on-time payments – and enhanceddiscount capture

75% reduction in AP costs

Global VAT and regulatory compliance – incl.in China

>4,000 suppliers network enabled

>500,000 electronic invoices/yr. – integrated with 7 ERP systems globally

70% global invoice volumes moved from paper to electronic – incl. non-PO

>30% reduction in BPO costs



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Driving Business Results via Intelligent Treasury And Working Capital Management

Control Predict Execute

Know your accurate global cash position and all

anticipated sources and uses

Dynamically maintain reliable liquidity forecasts to turn insight into action

Increase the effectiveness of payment and collections from action to accounting

Include full sourcing and sales order data in all

cash and liquidity reporting and analysis

Use liquidity projections as a basis for all

working capital policies and decisions

Minimize wasted working capital and fully exploit it

as a source to fund operations



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Thank You!



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Ariba NetworkAdapter

CXMLEDI

SupplierPortal

PaperInvoice

Suppliers

Sales

Order Mgmt.

Receivables

Buyers

Sourcing

Procurement

Payables


Treasury Department



Credit Mgmt.

Collections &Dispute Mgmt.

Cash Management

BankCommunication Mgmt.

In-House Banking

BanksBanks




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Thank You Sponsors!

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the working capital success guide - leveraging technology to effectively increase the value of cash

Business

better cash visibility

working capital performance

working capital decisions

excess working capital

cash reporting

forecasting companies

capital systems

better information