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 receivable or customer-to-cash (C2C) processes.

A holistic view of accounts receivable is critical to C2C process transformation

To produce working capital improvements from accounts receivable, world-class companies look at the C2C process across multiple functions, including sales and marketing, finance and operations. This is particularly important given the potential for conflicting priorities – for example, sales wants to keep customers happy while finance wants to accelerate cash collection. This requires carefully developed approaches for balancing the trade-offs associated with each decision made across the C2C process.

It is easy to think of cash collection as an external problem – the company versus a world of late-paying customers. The good news is that many steps for reducing accounts receivable are well within your organization's control. A thorough cash flow analysis of the entire C2C process can lead not just to a one-time recovery of delinquent receivables but to lasting gains in the form of accelerated cash flow, lower costs, reduced debt and greater customer satisfaction.

The 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 that impact working capital performance – 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 receivable best practices that can drive effective working capital management. We examine all facets of the revenue cycle – from sales and quote management to order processing to invoicing to collections to cash application – that impact accounts receivable balances. This cash flow analysis helps you understand how and when cash moves from your customers into your organization.

Revenue Cycle 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; they also produce exceptional return on investment in a short time frame.

Target and improve key accounts receivable process metrics

We use indicators and 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 sales outstanding (DSO)
  • Best possible days sales outstanding (BPDSO)
Operational metrics:
  • Days billing outstanding (DBO)
  • Days unbilled outstanding (DBO)
  • Accounts receivable aging balance
  • Bad debt/write-off expenses
  • Order errors
  • Billing cycle time
  • Cash target
  • Dispute volume & value by reason
  • Weighted average dispute resolution time
  • Weighted average terms (WAT)
  • Weighted average days to cash (WADTC)
  • Cash application cycle time