Managing cash flow, finding savings, and enforcing new spend policies are top of mind for most CFOs right now. With no end in sight to the coronavirus crisis (yet), procurement teams must prepare now for a recession. Their big challenge is to determine what should be prioritized to maximize results. Suplari is reacting quickly to customer requests to deliver fully automated insights from a customers existing ERP and financial data that identify opportunities to conserve cash, avoid large payments, negotiate better terms, and enforce new policies to unlock savings.
Suplari’s Insight Generator technology allows for the rapid development of insights that run in real-time on ERP, procure-to-pay, contract management system, T&E, P-card, and supplier intelligence data (like SEC filing and risk data). Suplari has an existing library of over 100 insights, and can quickly customize insights to a customer’s strategic or operational challenges.
Customers have reached out to ask for help to quickly respond to the coronavirus crisis and impending recession. Suplari has developed the following specific insights to rapidly optimize cash flow, payment terms and unlock spend savings:
Cash Flow Forecasting:
- Top Suppliers Spend Forecast
- Large Supplier Payment Predictor
- T&E and P-Card Subscriptions Forecast
Payment Term Optimization:
- Payment Terms What if Analysis
Rapid Spend Control and Reduction:
- New Weekly Suppliers
- New POs in Non-Essential Spend Categories
Top Suppliers Spend Forecast
One of the key challenges in understanding cash flow is forecasting future supplier spend. This insight forecasts future supplier spend for suppliers who represent your top 80% of spend. The next 6 months of spend are projected so you can visualize upcoming cash needs for what are likely to be your most strategic (and expensive) suppliers.
Procurement can use this insight to work with the CFO on aggregate cash flow management and quickly assess upcoming spend with your top suppliers. These suppliers should be strategic and are the most likely to negotiate creative payment terms considering the importance you represent to their business. You might also find high spend suppliers who are not strategic to your business over the next 6-9 months where you could also look to reduce spend.
Large Supplier Payment Predictor
This insight identifies large payments coming up in the near future. Consider it an early warning system of upcoming big cash outlays. Rather than using linear regression to predict the future spend, it looks historically for large annual or quarterly payments using a time series forecasting model called ARIMA.
The large supplier payment predictor allows procurement to work with business leaders to get ahead of upcoming large payments and prioritize negotiating improved payment terms such as splitting large payments up into several smaller payments.
T&E and P-Card Subscriptions Forecast
Service subscriptions such as SaaS software or recurring spend like GoGo Inflight or monthly parking can often be hidden in corporate card / P-Card or employee expense reports. This insight detects these recurring payments and identifies the aggregate spend across all employees for each supplier providing you a 30, 60, and 90 day view of spend on these subscriptions.
This insight prioritizes opportunities to cancel or put on hold subscriptions that are not needed right away. Secondarily, you can identify risks where employees are using software that has not been approved by security or spending off-contract at a higher rate than with preferred suppliers.
Payment Terms What if Analysis
One of the strategies our customers have used to improve payment terms is to investigate suppliers with a significant amount of spend under a variety of payment terms. These insights have been enhanced to help with cash flow management by doing “what if” analyses of cash flow (like if terms can be changed from Net 30 to Net 60, for example) and unlock savings. Procurement teams can use this insight to identify those suppliers with whom negotiating better terms would have the largest impact on the business.
New Weekly Suppliers
This insight identifies net new suppliers on a weekly basis. The insight is flexible so the customer can define the characteristics of a new supplier. Out of the box, it looks for suppliers who have not had any significant spend (defined by a threshold) over the last 18 months, and that were not new last week (that is only show net new suppliers from this week).
Most enterprises have a steady stream of new suppliers being added to their supply chain. If your company is managing supplier on-boarding very tightly, you will already have a handle on this, but if your supplier on-boarding process is more distributed (or lacking) you may be adding new suppliers in non-essential categories or adding new suppliers in categories for which you already have a preferred supplier. Jumping on this early may not save the initial payments but avoids further supplier creep and unfavorable pricing. It’s also possible to identify spending that is not on a PO or suppliers who are not under contract, which would allow you to implement a No PO – No Pay program.
New POs in Non-Essential Spend Categories
Many CFOs are establishing new policies to limit spending in non-essential categories. Suplari has created an insight that quickly identifies newly created purchase orders in specific spend categories that you choose to designate as non-essential. By pulling this data more frequently (in this case weekly), you can identify and connect with the PO requestor or approver before any cash leaves the building. You can set targets and track trends like the one shown below as the word gets out about new spending limits.
If you are interested in understanding more about Suplari and how our customizable Insights can help you react quickly to the challenges posed by the coronavirus and unlock cash flow savings, please contact us. We would be happy to help in any way.