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Tuesday, June 13, 2017

Pressure Mounts to Improve Cash and Working Capital for Financial Decision Makers

Creating predictability and eliminating the guesswork from AP and AR processes requires automating payment solutions, according to new study.

“The check is in the mail.”

When it’s time to be paid, few refrains produce more unease than this one. For healthcare suppliers working to improve receivables performance, ambiguity in payment processing is problematic. As competition intensifies and interest rates rise, the pressure on suppliers to create more predictability around payment processes is climbing sharply, according to a recent study by Institutional Investor Custom Research Lab.

 

The survey of 100 finance leads at top healthcare suppliers showed that 80% expect their teams to spend “much more time and attention” in 2017 on cash and working-capital performance due to mounting competition and interest rates. A lack of order-to-cash automation is contributing to their receivables challenges and diverting resources away from more constructive activities, the study showed. At the same time, providers are under increased pressure to lower costs.

Is there a solution that helps providers and suppliers realize their financial and operational goals without disrupting business flow?  

The answer is yes.

By implementing a common payment platform that standardizes and manages favorable terms and conditions for providers and suppliers, while reining in DSO to a manageable 15 days instead of the standard 45-60 days, the process can be simple and seamless. Such a platform can embed a mutually beneficial arrangement for working capital initiatives between AR and AP functions, while monitoring compliance and accounting. 

A common payment platform can offer insulation against changing business environments for providers. Should your supplier elect to change acceptable payment methods, disruption can be mitigated with a standardized and predictable process — preserving established efficiency and visibility. This also means no longer manually paying invoice by invoice thereby providing margin to reprioritize resources for higher value work. Suppliers that share the common payment platform get paid first enabling discounts and rebates, and emphasizes the value of the business relationships.

In turn, suppliers can achieve the kind of predictability they seek in the payment processes. Knowing when payment will occur allows for more working capital to fund high growth initiatives—a top priority cited in the Institutional Investor research. 

By automating the labor intensive process of manual payment and ensuring timely, secure payment to vendors, all members of the supply chain—providers, suppliers, distributors and group purchasing organizations—can begin to realize greater operational efficiency and financial returns.   

Automating and streamlining all stages of the payment process is only part of the answer. It’s also vital to ensure that a common payment platform provides multiple ways to securely accept recurring online ACH or credit card payments. This enhances financial outcomes through rebates or extended payment terms for all modes of settlement—with or without credit cards.

Allowing choice in how suppliers receive payments from providers ensures they receive the most current, accurate and high quality data available. And by securely consolidating multiple payments into a single electronic file, providers and suppliers have greater protection against online payment fraud while reducing the cost of processing invoices.

 Read more on Invoice and Payment Automation

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