Optimizing the Cash Cycle: Accounts Receivable and Payable Management

Introduction:

Cash is crucial to every business, playing a fundamental role in all financial management aspects, especially in daily operations. Effective cash management ensures that businesses can meet their operational needs, invest strategically, and manage finances to achieve profitability. Understanding the cash cycle, which encompasses accounts payable and receivable, is essential for optimizing cash flow. Implementing best practices in managing these accounts can significantly enhance cash flow and overall financial health.

Objectives:

By the end of this Cash Flow Management Process course, participants will be able to:

• Grasp key concepts of accounts payable, accounts receivable, financial accounting, and supply chain processes.
• Implement effective transaction management systems.
• Evaluate and recommend payment solutions and cash management strategies.
• Incorporate risk and uncertainty into cash flow management.
• Apply learned models to various industries.

Training Methodology:

• Case Studies
• Interactive Workshops
• Simulations
• Group Discussions
• Real-life Scenarios

Course Outline:

Unit 1: Introduction to Accounts Receivable: Overview

• Working capital and cash management overview.
• Investigating the cost of credit.
• Detailed function of 'order to cash.'
• Understanding credit risk.
• Impact of accounts receivable on customer service.
• Identifying weak links to improve customer satisfaction.

Unit 2: Customers and Trading Terms

• Rights of entry as a capital structure policy.
• Financial ratios, trend analysis, and financial statement analysis.
• Evaluating cash performance vs. profit.
• Managing financial distress with Altman Z-score analysis.
• Verification and monitoring in trend analysis.
• Performance evaluation beyond financial statement analysis.

Unit 3: Developing Effective Strategies to Maximize Cash Collection

• Pre-delinquency collection campaigns.
• Post-delinquency procedures.
• Customer-friendly collection techniques.
• Collection methods and letters sequences.
• Internal and external escalation policies.
• Enhancing collector productivity with a paperless workflow.

Unit 4: Practical Collection Tools and Techniques

• Removing payment obstacles.
• Addressing common excuses and delays.
• Solutions to payment problems.
• Telephone collection skills.
• Persuasive collections and negotiations.
• Building rapport with customers.

Unit 5: Management of the Receivables Ledger

• Encouraging cross-functional interactions.
• Setting goals and measuring performance.
• Handling document volume effectively.
• Formulating accurate KPIs.
• New concepts in accounts receivable management.

Unit 6: Understanding Accounts Payable, Financial Accounting, and Supply Chain

• Relationship between accounting systems and accounts payable.
• Financial information systems.
• Role and workings of the supply chain.
• Measuring financial strength and operational results.
• Importance of cash flow in working capital management.

Unit 7: Managing Accounts Payable Processes Towards World-Class Achievement

• Best practices in accounts payable.
• Growth beyond P2P.
• Risk management in accounts payable.
• Comparing management practices with industry standards.
• Scoping the end-to-end AP process.
• Common concerns in accounts payable.

Unit 8: Enhancement of Invoice Processing and Operational Management

• Completing and approving invoice payments.
• Ensuring correct invoice information.
• Managing low-value items.
• Preventing duplicate payments.
• Managing employee productive time and AP calls.
• Ownership of petty cash.

Unit 9: Leveraging Technology in Accounts Payable Processes

• Managing vendor files effectively.
• Controlling per diem, travel, and entertainment costs.
• Developing and implementing sound policies.
• Managing cash advances and expense reimbursements.
• Improving imaging and workflow processes.
• Utilizing the web to enhance AP effectiveness.

Unit 10: Executing Payments and Developing Relationships

• Handling communication and customer service.
• Knowledge of payment status for vendors and internal clients.
• Improving the Procure to Pay (P2P) cycle.
• Exploring new payment methods and solutions.
• Roles of payables and treasury in money management.