Holy Schadenfreude: Why Companies Still Miss Working Capital Opportunities
In German, there’s a word commonly referenced when expressing ones pleasure in seeing the misfortunes of another. To those of you not familiar with the German language, Schadenfreude may be misunderstood as a regional expression of “bless you” after sneezing.
However, when Schadenfreude is directed at YOU, it’s not something to sneeze at…kind of like these guys:
So…what are we actually talking about here as it relates to missed Working Capital opportunities?
Pain….as in the reasons for late payments and missed discounts pain!
For years now, organizations have listed Dynamic Discounting Management (DDM) as a priority to their overall automation objectives. According to a recent Paystream Advisors study, “more than 90% of AP practitioners” agree to discounting’s benefit.
If nearly everyone polled agrees that DDM is the right course of action to realize greater rewards, why then are organizations still not taking advantage of its obvious benefits? The reasons mentioned in multiple studies are plentiful from: lack of internal leadership, a whole host of operational and process issues, supplier resistance….you name it.
Conversely, if you ask organizations how they successfully implemented DDM programs, the barriers above were often stripped away, by a commitment in part to:
- Pursuing executive, or senior level management buy-in
- Committing to cultural/change management in a complete P2P vision and strategy
- Collaborating/communicating early and often with suppliers for shared goals
- Examining DPO terms/goals, cash conversion cycles, and improving process inefficiencies
- Investing in technology and services that encompasses a complete “Buy-Right-Pay-Right” strategy ensuring successful adoption and deployment
So, if you’re struggling on the front end with delivering a DDM value message, see how the CFO reacts to the potential risk-free return of between 12-36% on cash! I can’t imagine the message being misconstrued as anything other than positive…at minimum you should at least have his/her attention.
The whole point being, is striving to build consensus and help the organization or the minds-that-matter see the big picture. If the goal is to elevate AP from a cost center to a true profit center, exceed greater cash returns, invest in your extended supply chain, or simply become more efficient, DDM opportunities are a proven path for realizing significant ROI to the business.
Ultimately, change and commitment to doing things better are barriers for all companies. Yours is not alone and others have led the way for greater working capital improvement.
Will your organization be next?…
…or be another unfortunate Schadenfreude victim?