Importance of SAP FSCM in global business scenario
Today’s organizations need to be SMART enough to generate profit and value for its stake holders to stay in the game. The current global economic scenario has left companies reeling for cash and liquidity and the term Easy money and liquidity being replaced by Cautious approach. The money lenders have become more cautious in their approach and have reduced their risk appetite as they are also running short of cash and capital.
So apart from focusing on top line and bottom line, companies are giving much importance to Cash Flow figures and liquidity ratios. We have seen many firms almost crumbling under pressure and their daily operations coming to a halt in the recession times, although they had good bottom line.
SMART organizations are focusing more on Cash Flow management that can lead to a lower working capital and improve efficiency.
SAP FSCM package solutions help organizations to be SMARTER and achieve goals.
Below is a brief summary of actions organizations should perform and how SAP helps in achieving the same.
- It is important to evaluate the customer’s ability to pay and its financial status. Time taken to evaluate the same may result in loss of sales and inaccurate evaluation might result in write offs. SAP Credit management offers an effective solution in evaluating customers, monitoring customer credit conditions and enabling decision taking for credit managers.
- Although the Credit department evaluates and makes credit decision while selling goods to customers, it is important that the collections department recovers receivables on time to prevent overdue accounts, bad debts, increase of DSO and working capital. SAP dunning notices sometimes fails to deliver effective results. So SAP Collections management has been introduced to proactively manage overdue receivables, ensure smooth process of collecting receivables and receipt of cash on time to decrease DSO and improve working capital.
- In Case of any Dispute with the customer, the same should be recognized early and efforts should be made to resolve the same quickly to avoid in correct cash flow visibility and write-offs. SAP Dispute management module offers organization to channel their operations in a smarter way with help of SAP Dispute management and deliver quick and effective results.
- SAP Cash flow and liquidity management helps organizations greater visibility and predictability of cash movements, enabling them to manage and plan cash flows and liquidity. It integrates cash movements from different departments, accounts payable, receivable, treasury and offers a central dashboard view of the cash and liquidity position of the organization.
All these above modules are well integrated among themselves to help organization to perform smoothly, improve their operational efficiency and helping them to become SMART organization and remain competitive in this global market.