Overview
A large multinational company with extensive operations across multiple locations faced significant challenges in managing its cash flow. With cash constantly moving through the system, both as inflow and outflow, and with multiple points of sale and vendors dispersed across different regions, the organization struggled to track and manage its cash effectively. Forecasting fund shortages or excesses and making timely management decisions were nearly impossible. To address these issues, Aevitas IT implemented a comprehensive SAP Financial Supply Chain Management (FSCM) solution, transforming the company’s treasury operations and cash flow management.
INDUSTRY:
Retail
LOCATION:
Global
IMPACT:
Centralized Cash Management | Enhanced Cash Flow Forecasting | Optimized Fund Usage | Simplified Bank Reconciliation | Improved Payment Processing
Challenges
The company encountered several critical challenges in managing its cash flow:
Decentralized Cash Collections
Cash was collected at multiple locations and deposited across various banks, making it difficult to track and consolidate funds.
Inconsistent Bank Balances
The company lacked visibility into the balances available across its numerous bank accounts, complicating cash management.
Payment Uncertainty
Determining which bank account to use for paying commitments was a challenge due to the dispersed nature of the accounts.
Inability to Forecast Cash Needs
Predicting fund shortages in advance was difficult, leading to potential cash flow crises.
Unrecognized Excess Funds
The availability of excess funds was often overlooked, leading to missed opportunities for strategic investments.
Complex Bank Reconciliation
The process of reconciling bank accounts was cumbersome and time-consuming, causing delays and inaccuracies in financial reporting.
Goals and Objectives
Aevitas IT aimed to address these challenges with the following objectives:
Streamline and centralize cash collection processes to improve tracking and visibility.
Organize bank accounts to better manage cash inflows and outflows.
Automate the cash concentration process to ensure liquidity and optimize fund usage.
Enable accurate forecasting of cash shortages and excesses to support proactive financial management.
Simplify and automate bank reconciliation to improve efficiency and accuracy.
Solution
Aevitas IT designed and implemented a robust cash management solution using SAP FSCM:
1
Bank Account Categorization
Bank accounts were restructured into three categories:
- Collection Accounts: Used for receiving cash from multiple locations.
- Cash Concentration Accounts: Centralized accounts where funds were automatically swept at the end of each day from the collection accounts.
- Payable Bank Accounts: Dedicated accounts used exclusively for processing payments.
2
Automated Cash Sweeping
All amounts collected in the collection accounts were automatically transferred to cash concentration accounts daily by the bank, ensuring centralized control of funds.
3
Optimized Payment Process: Payments were processed through the payable bank accounts, with debits automatically swept to the cash concentration accounts, simplifying the payment process and ensuring liquidity.
4
Liquidity Monitoring
The customer’s treasury team was empowered to monitor the cash concentration accounts closely, allowing for effective cash management and liquidity tracking.
5
Decentralized Reconciliation Automation
The solution enabled decentralized bank accounts while automating reconciliation processes, reducing manual effort and errors.
Project Delivery
The project followed a strategic and phased approach:
Challenge Review and Strategy Formulation
Aevitas IT reviewed the existing cash management challenges and formulated a comprehensive strategy to address them.
Solution Design and Prototyping
A solution was designed and prototyped for one bank, ensuring its effectiveness before scaling up.
Full Implementation
The solution was rolled out across all relevant banks, with a focus on ensuring smooth adoption across the organization.
Workforce Training and Empowerment
Extensive training was provided to the treasury team, empowering them to manage the new processes effectively.
Leveraging SAP FSCM
The solution harnessed the power of SAP FSCM to drive automation and efficiency across all aspects of cash management.
Results and Impact
The implementation of the SAP FSCM solution delivered significant business benefits:
Centralized Cash Management
By categorizing bank accounts and automating cash sweeping, the company achieved centralized control over its funds, improving visibility and management.
Enhanced Cash Flow Forecasting
The company could now accurately predict both fund shortages and excesses, enabling proactive decision-making.
Optimized Fund Usage
The solution ensured that excess funds were recognized and could be strategically deployed, improving financial outcomes.
Simplified Bank Reconciliation
Automated reconciliation processes reduced the manual workload, improved accuracy, and expedited financial reporting.
Improved Payment Processing
With a dedicated payable bank account structure and automated cash flow, the payment process became more efficient and reliable.
Conclusion
Aevitas IT’s implementation of the SAP FSCM solution revolutionized the client’s cash flow management and treasury operations. By organizing bank accounts, automating key processes, and enhancing cash visibility, the company was able to overcome its cash management challenges and achieve a more stable, predictable financial environment. The transformation not only improved operational efficiency but also provided the company with the tools needed for effective financial planning and strategic growth.
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