Cash & Liquidity Management

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ING Guide to Financial Supply Chain Optimisation Creating Opportunities for Competitive Advantage In the earlier parts of this special Guide to Financial Supply Chain Optimisation, brought to you by ING, we have explored the elements which comprise the financial supply chain, from order to cash to purchase to pay, including both trade and cash. We have also considered various ways of leveraging financial assets such as purchase orders and receivables. In the final part of the Guide, we consider some of the opportunities to reduce costs and enhance efficiency in the financial supply chain further....

ING Guide to Financial Supply Chain Optimisation

Creating Opportunities for Competitive Advantage

Section Five:

Joined Up Processing - Creating an Integrated Approach to Financial Processing

Gregory Cronie, ING Wholesale Banking, Payments and Cash Management Sales

In the earlier parts of this special Guide to Financial Supply Chain Optimisation, brought to you by ING, we have explored the elements which comprise the financial supply chain, from order to cash to purchase to pay, including both trade and cash. We have also considered various ways of leveraging financial assets such as purchase orders and receivables. In the final part of the Guide, we consider some of the opportunities to reduce costs and enhance efficiency in the financial supply chain further. Firstly, we review how corporate-to-bank connectivity has evolved in recent years, and how new initiatives, such as SWIFT Corporate Access can augment a financial supply chain strategy. Similarly, with the Single Euro Payments Area (SEPA) now a reality, Sander Cok explains how SEPA migration will support corporate financial supply chain projects.

As we have outlined during the Guide, an optimised financial supply chain requires efficient internal processes, effective collaboration with financial partners, the right liquidity structures and the use of appropriate financing techniques. However, another crucial element in the success of virtually every initiative relating to the financial supply chain is the involvement of a banking partner which is committed to financial supply chain solutions. To illustrate this in more detail, we are delighted to present an interview with Robert Heisterborg, Global Head of Payments and Cash Management at ING.

...another crucial element in the success of virtually every initiative relating to the financial supply chain is the involvement of a banking partner which is commited to financial supply chain solutions.

One of the points Robert illustrates is the problem that in many companies, different departments hold responsibility for each element of the financial supply chain; for example, treasury, trade finance, accounts payable and accounts receivable may be managed separately with different objectives and performance measures. In addition, processes such as invoicing and purchase order management may take place as part of the sales process, as opposed to being part of the finance function. This means that in many cases, optimisation initiatives are restricted to individual elements of the financial supply chain, such as payments or collections projects, without taking a more holistic view. This can reduce the value to the business overall; for example, a collections project may deliver improvements in DSO (days sales outstanding) but unless this is integrated with eInvoicing, dispute resolution and reconciliation may remain problematic.

Companies have taken different approaches to addressing this issue. One solution is for the project to be sponsored by the CFO or Finance Director who has oversight of all of the relevant departments. A project team can then be set up to include representatives from each area who can take responsibility for implementing change in their department and work with other areas to ensure that value is being delivered at a company level, as well as process level. In addition, centralising financial processes can be a catalyst for reviewing the overall effectiveness of the financial supply chain. In particular, a financial shared service centre (SSC) can often create greater synergies between processes. Many larger companies have one or more SSCs already, and increasingly, smaller firms are also seeing the benefit of centralising their financial activities through a SSC. ING has particular expertise in supporting European SSCs, including Central & Eastern Europe (CEE). While there are a variety of factors in determining where a SSC is based, including the location of other business facilities, the availability and cost of business and language skills, time-zones, access to infrastructure and regulatory/taxation issues, many firms have chosen CEE as a base for their European SSC due to its advantages in many of these areas. Furthermore, some firms have chosen to relocate SSCs which were previously based in Asia into CEE as the cost differential becomes narrower and companies increasingly prefer to site their SSCs closer to other business facilities. ING has a significant presence and local expertise across CEE countries and is therefore well-equipped to assist companies in planning and implementing a financial SSC.


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