Assembling an elite squad to manage cash pressures
So how can a liquidity council solve these issues and accelerate cash flow? And what skill sets and experience does it need? Your team should bring together the cash leads from various business units, and subject-matter experts from functional areas such as receivables, payables, supply chain, and data analytics. This task force will generate diverse thinking and approaches to break down silos and help identify key problem areas. And it will generate actionable insights and clearly defined solutions that improve cash conversion.
With representatives from all teams working together, the council can identify the best way to combine approaches across receivables, payables, and inventory to deliver three-to-five key initiatives.
These activities would include short-term actions, such as reviewing overdue payments and deductions, revising collections strategies, rationalizing payment terms, improving cash forecasting, and enabling supplier resilience. They would also paint a clear picture of long-term structural changes, like rethinking inventory planning, advancing demand sensing, reducing product portfolios, and introducing supply chain financing.
The council sets the foundations for long-term structural improvements by developing an end-to-end process view of how an organization should manage its working capital. This enables the company to:
- Make sure improvements to the cash-conversion cycle are sustainable.
- Adopt digital capabilities to generate actionable insights and eliminate the need to work across silos, rework errors, and process backlogs.
- Re-architect working capital management models to make them agile.
A liquidity council also features rapid-analytics pods. These data-science professionals follow a hyper-agile delivery model, have deep forecasting skills, and use external sources and models - such as social media, publicly available data, and supply chain simulations - in their work. Coupled with the council's holistic view of the business, the pods can deliver an immediate and visible impact on cash performance.
How do companies sharpen cash-flow projections with data-led intelligence?
By establishing a cash-focused task force, your business can:
- Use models built on business knowledge powered by AI and advanced analytics to improve cash-flow forecasts and cash-position predictions.
- Unlock data-driven intelligence and insights around default risk segmentation, ordering, and payment behavior.
- Revamp policies and processes on bad-debt write-offs, payment terms, and claims using predefined modules and algorithms.