Cash flow management and the need for optimized processes


Ineffective cash flow management can have a significant impact on business profitability, representing one of the biggest shortfalls for CFOs. This is especially concerning as liquidity management has become more complex. The financial consequences of this are, first and foremost, delays in collecting payments from customers that lead to insufficient cash flow. This, in turn, can require costly borrowing to keep operations running. Late payments to suppliers can also result in penalties and affect business relationships. 

The shortfall as defined by CFOs

When CFOs talk about shortfall, they’re referring to financial losses or unrealized profits resulting from various factors that hamper the financial performance of the company. It generally includes:

  • Potential losses linked to late payments
  • Additional financing costs
  • Mistakes in financial management
  • Missed opportunities for cost reduction
  • Affected customer relationships

In other words, shortfall represents the financial opportunities lost or compromised due to problems, delays, or inefficiencies in the management of the company’s finances. CFOs seek to minimize this by implementing strategies and solutions to optimize the company’s profitability.

The impact of late customer payments

When it comes to liquidity management, late customer payments represent a major challenge for CFOs. They can result in insufficient cash flow, which can require costly borrowing to keep operations running. Additionally, lack of liquidity can hinder investments, growth, and the ability to seize strategic business opportunities.

But Corcentric has an answer for this problem, our Managed AR solution. which will help you sustainably reduce your DSO, eliminate risk on debt collection, and benefit from better visibility into cash flows. By opting for our service, you benefit from a non-recourse guarantee for all or part of your debt portfolio, at your convenience. You no longer have to worry about bad debts or hidden fees due to non-payment by customers. Corcentric’s Credit Management automation (electronic invoice delivery, tracking and payment options) helps optimize processes and provides the financing needed to eliminate your exposure to late invoice payments while reducing unrecoverable credit losses.

The consequences of late payments to suppliers

According to a study by the Association for Financial Professionals (AFP), 56% of businesses reported that late payments to suppliers had a negative impact on their business relationships. In addition to the financial implications, this issue is also part of a broader perspective of Corporate Social Responsibility (CSR). Meeting payment deadlines is an essential element of CSR, showing a company’s commitment to its business partners and its contribution to supply chain sustainability. CFOs must therefore balance the need to maintain good supplier relationships while managing cash flow effectively.

Corcentric’s Source-to-Pay solution aligns the management of suppliers, contracts, spend commitments, and invoices on a single platform. It thus offers total visibility over Purchasing and Finance processes, reducing the risk of errors for faster and more accurate supplier payments. By contributing to responsible management of relationships with suppliers, the Source-to-Pay solution fits perfectly into a global CSR approach, promoting sustainable and responsible partnerships within the supply chain.

Two solutions combine to improve the management of your cash flow

Ineffective cash flow management, marked by late customer payments and late payments to suppliers, can have a significant impact on the profitability and financial stability of businesses. The impact of these delays results in insufficient cash flow, high financing costs, missed investment opportunities, and affected business relationships.

However, Corcentric has solutions to optimize all Procurement and Finance processes:

By combining these two solutions with a strategic approach, CFOs can better manage their cash flow and strengthen the financial resilience of their company, thus freeing up valuable resources for sustainable growth.