By Terence Leung
For organizations with a high volume of procure-to-pay transactions in multiple geographic locations and a complex network of suppliers, some are running out of ideas for improving Days Payable Outstanding (DPO) and other efficiencies. They have seek external help and developed better reports. But they find themselves approaching the limit of creditor stretching.
As PWC mentions in its annual Working Capital Study, many drivers to solving working capital related problems are operational in nature, not just financial. With the injection of prescriptive/predictive analytics, artificial intelligence and machine learning,
- the visibility of the causes of inefficiencies will vastly improve. For example, with Balance Sheet of the Future™, the end-to-end procure-to-pay process and the fine-grained transactions can be visualized in context. Simple questions that might be difficult to answer before, because of disjointed data issues, like “why are there so many prepayments in this region”, “why are the prepayment terms not being utilized for this supplier”, “how can we make use of supplier discounts more, taking into account interest rates”, can now be analyzed, without lengthy data acquisition and model development.
- advanced scenario analysis can help finance and business decision-makers see clearly the important drivers and gauge the impact in monetary terms and other measurements for modifying the drivers. The decision-makers can also visualize the key risks.
This is made possible by data science, advanced statistical methods, and artificial intelligence in the background. With this “Data Scientist in a box”, finance and business executives can focus on improving business performance of the company, after taking into account a broader set of factors. Contact us to learn more.
A note about the author: At Greenlight Technologies, Terence Leung conceptualizes and manages analytical solutions for Finance, which serves the increasing needs of the Office of the CFO on strategic decision-making critical to processes, operations and transformations. He was previously at Deloitte Consulting’s Finance, Operations and Strategy practice and at solution providers including i2 Technologies (now part of JDA) that optimize company performance and processes. Terence really enjoys interacting with industry practitioners on topics such as business value, technology, business models, and especially analytics.