Dear CFOs, Want to Survive Covid-19? Collect Cash and Transform Processes

Across Europe, businesses are facing significant treasury challenges and the need to produce stress test scenarios and short-term plans. CFOs are grappling with macroeconomic volatility, which is inevitably impacting cash flow forecasting and working capital too. A UK report argues 20% of small and medium-sized enterprises (SMEs) in the UK will collapse due to a lack of revenue because of Covid-19. Collecting cash has been also an ongoing issue across sectors. Due to Covid-19, the problem has been exacerbated, but where are we precisely?

The Sidetrade Unpaid Invoice Tracker, based on statistical analysis of 26 million invoices, representing €54bn of B2B transactions, reveals (anonymously) the payment behaviour of over 3.7 million enterprises in six European countries. For the first time, an in-depth study lifts the veil on late payment. Unsurprisingly, since 11 March 2020 (WHO pandemic declaration date), payment delays have skyrocketed. The rate of increase in unpaid invoices has shot up over 40% in the UK and 35% in France. The weekly tracker serves as a score card to remind the business community of the importance of paying suppliers responsibly, so as not to worsen the effects of the crisis on businesses already in difficulty.

The tidal wave of unpaid invoices is focusing the attention of CFOs. “I can’t get hold of my customers,” a manager from a large company tells me. He also finds himself with a lack of visibility around the productivity of his credit management team. “We’ve told the team to work only four hours a day – great for cost control, but now I have an account coverage problem,” says my contact.


Digital takes hold

In addition, this crisis context has pushed us further into a digital world, and changes in behaviour are likely to have lasting effects when the economy starts to pick up. Virtualisation, robotic process automation (RPA) and artificial intelligence (AI) technologies are no longer merely in the pipeline; they are here and now – ready to robotise the order-to-cash process.

CFOs and treasurers should be acting now to implement these technologies, but is every company ready to embrace a more digitised existence? With teams working from home for the first time, I think so! Because offices are closed, letters and phone calls are inefficient. So, interactive dunning letters become mandatory. They help prompt payment from customers, keep teams abreast of payment delays or disputes, and log customer responses as they come through.

Another important feature is the ability to create tailor-made payment plans for struggling customers. “We’ve agreed to let some customers settle their accounts over time, but we’ve no way of tracking this,” complained one counterpart. Automated workflows, real-time data visualisation of ageing balance and days sales outstanding (DSO), and dunning plans should be utilised so cash is collected in a way that is manageable for customer debtors, with flexibility around instalment amounts, frequency, and start date.


The right tools for the job

The crisis is speeding up the global transition towards a digital economy. New technologies are now going to become embedded company-wide, making life easier for everyone. Without being too self-promotional, Sidetrade’s CashControl is one such example. This state-of-the-art accounts receivable platform is being offered for free until 30 June 2020 to SMEs. Machine learning will improve productivity, accuracy, visibility, and efficiency, as well as free up more time for finance teams to have better customer communication. You might call this ‘boring AI’ as PwC did in a 2020 report about AI for business, but it significantly improves cash collection.

Crisis conditions have exposed to us the wide chasm between digital and non-digital CFOs, revealing just how far behind many are on digital uptake. CFOs are now empowered to take the helm and leverage new technologies. If IT departments are still guardians of information systems, processes are in the hands of CFOs – now more than ever.

A survey of CFOs carried out in May 2020 by PwC found that 48% will accelerate automation and new ways of working. Similar results, were found by industry analysts Gartner, also in May 2020, showing that CFOs plan to maintain, rather than cut, investment in technologies such as AI, automation, and analytics.

This is insightful: forward-thinking CFOs know that digital transformation is now essential for business survival. Accounts receivable is an ideal area of the business to enhance with RPA, AI recommendations, and predictive analytics.

Flexibility, fast working and adapting to change have become crucial for finance. Digitalisation of processes, collaborative working and information sharing are speeding up analytical and anticipatory capabilities. When a company has an efficient, user-friendly platform to rely upon, it also becomes more efficient; it gains the power to anticipate.

CFOs will gain a macro-vision that enables them to give insights on customer payment behaviour, preventing treasury risk. No longer satisfied with analysing the past, today’s CFOs are looking to the future. Using intelligent technology, they’ll be able to make this crucial transition smoothly.

And you? Are you ready to adopt and take advantage of new technologies?