Improve cash flow management

In a volatile era, there is no substitute for cash. No matter how much revenue you recognize or how many assets you have on your books, the simple and enduring truth is this: The enterprises that survive are those that generate enough cash to keep their operations running.

Improving cash flow management starts with understanding gaps in each component of the cash conversion cycle. This includes accounts payable, or source-to-settle (S2S) processes.

A holistic view of accounts payable is critical to S2S process transformation

To produce working capital improvements from accounts payable, world-class companies look at the S2S process across multiple functions, including sourcing and procurement, finance, operations and treasury. This is particularly important given the potential for conflicting priorities – for example, sourcing and procurement may strive for strong supplier relations while finance wants to capitalize on early payment discounts. This requires carefully developed approaches for balancing the trade-offs associated with each decision made across the S2S process.

A global leader in improving working capital management

REL, a division of The Hackett Group Inc., has helped many of the world's leading businesses release billions through sustainable working capital improvements. We focus on three critical end-to-end processes – inventory management, accounts receivable, and accounts payable – to improve cash flow management and service performance while enabling cost optimization and risk management.

Through more than 30 years working with Global 1000 enterprises, we understand accounts payable best practices that can drive effective working capital management. We examine strategic sourcing processes from beginning to end, covering all activities that impact accounts payable balances – from determining your spend budget, to segmenting preferred suppliers, to receiving supplier invoices, to handling discrepancies, to settling supplier liabilities.

purchasing strategy

We blend our experience, tools and understanding of business best practices with your team's operational experience and local knowledge to create a holistic working capital management solution that can improve cash, cost and service levels – and equip your organization to realize and sustain better working capital performance.

We have used this approach to deliver successful working capital initiatives in more than 60 countries. These projects not only deliver tangible working capital and cash flow improvements, but they also produce exceptional return on investment in a short time frame – for example, by reducing:

  • Cost of goods sold through better management of discounts
  • Sales, general and administrative (SG&A) costs through lower transaction processing costs, better utilization of technology and structural changes such as shared services

Target and improve key accounts payable process metrics

We use indicators and process metrics such as these to assess the health of your working capital management practices, help you understand how your performance compares with peers and world-class organizations, and facilitate continuous process improvement.

Headline indicators:
  • Days payables outstanding (DPO)
  • Weighted average days to pay (WADTP) actual vs. standard
  • Weighted average terms (WAT)
  • Early/late payment
Operational metrics:
  • Early/late payment
  • Spend per term
  • Supplier Pareto
  • Payment run profile
  • % EDI
  • Order-to-settlement cycle time
  • Blocked payments
  • Contract term leakage
  • Volume of purchase with PO
  • Average spend per supplier per category