If you are planning an FSCM implementation it is important that you receive support from certain key stakeholders. The message that you need to provide to them will be different depending on the role they perform within an Organisation. I am planning on writing a few short blogs to identify the key messages that should be portrayed to the key business stakeholders.
For an overview of what business issues SAP FSCM tackles and the functionality within SAP FSCM please review the following blog What exactly is SAP FSCM – a high level guide to the processes and the benefits
Why the CFO?
The CFO may be a person who you speak with daily or they could be a person you never have dealings with. Either way, the chances are this will be the project sponsor of a FSCM implementation. It is therefore important that any message you pass on to the CFO is meaningful and provides significant relevant benefits. I am not saying the CFO is the first person to contact, however as they will potentially be sponsoring the implementation care is required when positioning a business case to a CFO.
Responsibilities of a CFO in an Organisation.
1/ Manage (indirectly) a number of Finance staff. A CFO will head a number of financial processing divisions. The budget and size of all of the full teams is ultimately their responsibility and there will be a pressure to drive down costs from the board. Having large teams to collect cash can be a strain on the budget that has been set. Further to this there will be a credit management team, and you may have a team that is responsible for logging and resolving customer disputes. Both of these teams will indirectly report to the CFO and any efficiency here would be well received.
2/ Ensure the performance of the full finance team meets its expectations. These are normally measured by a series of KPI’s (key performance indicators). Within the accounts receivable world will be a KPI that focuses on the ability to collect outstanding cash in an efficient manner. The common terminology for this is the “DSO” Days Sales Outstanding, and is a measurement of how quickly cash is collected from an organisations customers. Further KPI’s will cover the resolution time of resolving customer disputes and the value of the “bad debt” and organisation “writes-off” during a fiscal year.
What benefits can you demonstrate to the CFO?
1/ Ideally you should be able to provide some benefits by reducing the volume of resources the CFO has in the cash collection team and dispute handling team. By reviewing how the current team currently work, and comparing that against the new processes, efficiencies should be able to be drawn from the proposed implementation. If you cannot show that the number of resources will reduce, you should be able to prove that the team would be working within an enhanced structured procedure which should improve the performance of the team.
2/ The other main benefit will be improving performance based on the set KPI’s.
· By improving cash collection, the DSO KPI should reduce providing significant financial benefit for your organisation.
· By improving the dispute management resolution time will also improve, which in turn will assist in the cash collection process providing further reductions to the DSO.
· By enhancing the credit management process, the KPI for bad debt write off’s should be improved due to better control and the usage of internal and external credit data.
· By utilising Biller Direct, the cash collection team and dispute management team and focus on proactive work, rather than dealing with simple customer account queries which will not be raised as the customer will have access to that information themselves.
By focusing on these two key areas and providing real life examples to the CFO, the business case you provide will become more compelling. Everyone wants to cut costs, and improve efficiency. FSCM is a SAP product that is designed to perform this for Organisations and the business case can be easy to write due to the potential benefits an organisation can achieve.