Source-to-Cash - the natural result of digital transformation
Industry Trends and Technology, Cash Management, Source-to-Pay
What is source-to-cash? That is clearly the first question to be answered. Quite simply, source-to-cash is the total offering from OpusCapita. But what is it in practice? In practice, it’s simply the combination of our two core portfolios, source-to-pay and cash management. But it’s more than just a clever word combination, just like source-to-pay suggests a greater sum than its parts (procurement and accounts payables), source-to-cash offers new, important synergies.
Although it may seem like a linear process, sourcing, operational procurement, digital message exchange, invoice approval, bank connectivity, payments, liquidity management, cash flow forecasting, more digital message exchange on the accounts receivable side, more bank connectivity, payment reconciliation, more liquidity management, more forecasting, etc - you get the point. It’s linear sure, but I’ll bet you can already start to see that it’s one cyclical process.
More than simply cyclical, it’s a process with non-linear benefits. For example, e-ordering clearly encourages e-invoicing, which benefits invoice automation - so procurement digitalization promotes invoice automation. That’s clear, but did you know that the majority of source-to-pay or purchase-to-pay providers don’t even do payments, let alone jump into the complexity of bank connectivity. But payments are linear and I want to give you some non-linear examples which explain why source-to-cash is important to understand. Consider the positive impact that effective procurement and minimal or just-in-time inventory have on the treasury’s working capital requirements, borrowing costs and possibly f/x fees. Another example is the collaboration between treasury and procurement around the negotiation of payment terms and recommendations for early payment options. Additionally, both procurement and treasury play a role in jointly managing or mitigating risk? Supply chain risk is big for procurement but treasury can reduce it through supplier financing.
In addition to the clear, and growing value, that we see through increased collaboration between procurement and treasury, we also feel there is a bit of a burning platform on this issue. It’s not simply that OpusCapita likes the wordplay of source-to-cash, we believe the transactional elements within financial and procurement processes will offer fewer value creation opportunities as digitalization increases. With this commoditization of transactional automation in accounts payable and accounts receivable (primarily in AP and AR) new value sources will have to be found and we believe the new value drivers will be found in procurement and cash management processes. It’s true that many channels and commodity groups within procurement are quite easy to automate but the level of complexity and required collaboration with suppliers create many examples of non-easily automated processes.
Digital transformation is changing processes, business models and working culture. And while OpusCapita may not have invented digital transformation, we did create source-to-cash because we strongly believe it’s important to proactively prepare for a post-invoice economy (the time after every transactional invoice-related process has been automated and there is no more value to be squeezed from it).
Consider the current pace of change. Consider your next 3 year plan. Consider source-to-cash.
Call us if you want to discuss a roadmap into the post-invoice economy and how source-to-cash can become your next value driver.
Rowan has more than 10 years of experience in the purchase-to-pay arena. During this time, he has managed the go-to-market for a diverse set of portfolios including Accounts Payable Automation, B2B Networks, Financing Services, eProcurement and Product Information Management.
Read more blog posts about Source-to-Pay
The Future of Source-to-Pay
21 - 02 - 2020
What is the future of source-to-pay? Rowan Lemley offers his opinion in this recent blog.
Building a foundation for source-to-pay
27 - 01 - 2020
It wasn’t too long ago that a colleague of mine suggested that the worst thing an organization could do (when building up their source-to-pay) was to focus on the low-hanging fruit
Your Source-to-Pay FAQ - in blog form
03 - 12 - 2019
We started with an FAQ but realized people prefer blogs so we turned it into a blog - check it out and see if it doesn’t answer your questions.