Last month I posted a blog encouraging CFOs to embrace CRM—or more precisely, sales force automation applications. I recounted how a former customer’s key executives performed a weekly examination of the sales pipeline and the status of each opportunity contained in it to re-affirm their earnings and cash flow forecasts as well as their supply chain sourcing and production activities. In doing so, the business was always in synch and they rarely had earnings, cash flow and excess inventory surprises. The CFO commented to me that he felt very little risk of being “blindsided”.
In this post, I’m going to walk you through how you can use SAP Business ByDesign to similar effect. The logical starting point is in the CRM New Business work center/opportunity pipeline view. This provides a roll up of all the opportunities and more importantly, their probability of closing based on their stage in the pipeline. Business ByDesign multiplies each opportunity’s expected value by the associated probability to derive a weighted value—a figure that’s widely used in sales and revenue forecasts. Next, you would check the Sales Orders work center for all open orders. Here is where many problems can be identified. How big is the order backlog? Are logistics issues preventing orders from being filled? Are there filled orders that have yet to be invoiced? These issues don’t show up in finance because most GL postings aren’t triggered until an order is invoiced. However, a lot of issues that affect revenue and cash flow reside in the order pipeline and regular examination or better yet, time based alerts can notify responsible managers to take action while there is still time.
Finally, we come “home” to the financial side of Business ByDesign. In the Liquidity Management work center/liquidity forecast view, items such as opening and closing bank balances (from multiple banks), receivables and payables and other items form a comprehensive cash flow forecast that can be broken down by any number of time periods. Bank statements can be automatically imported using the SWIFT (MT940) and BAI2 file formats and the forecast sources its receivables/payables data directly from the GL and pending payments from the payments monitor in the Payment Management work center. Additional items such as forecasted revenue and pending orders can be easily added to the forecast in Business ByDesign or, if you prefer, an Excel spreadsheet exported from the liquidity forecast. The key message here is all the data you need to get a read on the “rhythm of the business” is contained in Business ByDesign which eliminates a lot of data gathering, re-keying and errors. We finance people hate surprises and SAP Business ByDesign can go a long way to making your life easier and a lot more predictable.