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Why Vision and Strategy are Important to an Organisation’s “Cash-Excellence” Culture?

Effective Working Capital Management has always been a business fundamental and long-term practice to help guide future business decisions. In many industries, obtaining adequate financing and balancing debt to equity can be incredibly challenging to maintain. But never has it been more important to understand the levers of profitability and cash management in your business and how to plan accordingly.

Managing working capital effectively should always be a top priority for CFO’s The COVID-19 pandemic raised significant working capital challenges and uncertainties for many companies, but what it did reveal is the critical importance of “cash-excellence”. The opportunity (and key focus) for CFO’s and Executive Management is on strengthening the cash management culture across their organisation so they can build on their initial response to the COVID-19 pandemic; by elevating their cash management capabilities and safeguarding cash in their business.

Now is the time to create a new culture in the pursuit of “cash-excellence”!

Whilst developing a higher level of working capital competence sounds simple, the actual reality is that the execution process can be quite complex. It is why any cross-functional organisation – from supply chain to warehouse, from customer service to service support, from marketing to sales, from procurement to finance – everybody needs to work together to achieve a common working capital goal!

Working Capital Management will always be a continual work-in-progress (WIP). Whilst it is important to focus on financial results relating to profitability and cashflow, it is also equally important to concentrate focus on your key assets – your people! This ensures that they have a deep understanding of the timing (and quantum effect) of cashflows within the business and will help your organisation develop a true “cash” culture.

A focus on Strategy, Innovation, and Change

In general, ‘best-practice’ organisations are successful because they take a cross-functional approach to establish stakeholder accountability and alignment to their organisational strategy. They have instilled the importance of financial discipline as a ‘top-to-bottom’ approach, drive collaboration through cross-functional teamwork, and involving the entire organisation – Sales, Marketing, Customer Service, Procurement, Operations, Supply Chain, Accounts Payable, Accounts Receivable, Treasury, and Finance functions.

How do you achieve ”cash-excellence” culture within any organisation? Well, the engagement process relies on a holistic framework and comprises three (3) key areas:

1. People

People are the most important part of any organisation.

A strong cash culture starts at the top of an organisation. CEO’s and CFO’s need to set the Working Capital agenda by making cash management their top priority. The communication process needs to clear, regular, and consistent to all stakeholders, teams, and employees – the importance of cash management but in the context of value creation – providing capital for investment in the organisation’s future growth.

With any new process implemented into an organisation, there will always be some level of pushback from employees and who are averse to any change. But Executive Management makes this change more seamless (and transparent) by communicating that increased cash is necessary for business growth and asset allocation for new projects.

This is about educating your employees by giving them the tools to make better decisions for the business but helping them to understand ‘why’. The creation of internal dialogue, feedback, and values engagement helps to explain ‘why’ implementing stricter cash management processes is essential and what “cash-excellence” means to motivate employees to take part in this change program.

2. Structure

Structure creates (and defines) great accountability and discipline.

The CFO kickstarts the internal discussion about cash management and sets the required standards for performance. By routinely examining cash management practices with Process Owners, Managers, and key stakeholders, this helps to establish a clear consensus for practicing financial discipline across the entire organisation.

As an existing governance structure, cash management should be a regular agenda item in Executive Management Meetings, with clear accountabilities for Process Owners. With delegation and decision-making (based on Authorisation Matrix) assigned to Managers and with an escalation structure to the CFO for any circumstances that have significant implications on cashflow. This sets an appropriate standard to discourage employee behaviours that simply focus only on improving Quarterly, Half-year, or Year-end results.

3. Process

Process guides your organisation to meet its goals and strategy must be aligned to goals.

A clear and practical policy framework should be in place to provide guidance on cash management. The CFO, in conjunction with the CEO and Executive Management Team, establishes a transparent cash-reporting system and which is readily accessible to all stakeholders throughout the organisation. The CFO monitors the organisation-wide Key Performance Indicators (KPI’s) for cash management tracking, providing clear targets, and assigning KPI’s to key stakeholders.

Creating organisational change may demand frequent testing and adjustments as business needs evolve. Once the messaging process and regular check-ins are established, receiving internal buy-in is critical for employees to act on cash management strategies. Therefore, a transparent Communication Plan must be engaged (and executed) so that all employees can visualise the results, learning outcomes, and next steps.

3 Key Areas to significantly improve Working Capital

working capital stacked coins growth with dirt plant

Less-than-optimal Working Capital Management practices include poor invoicing practices, weak policies / procedures, outdated IT systems, or inefficient processes, but they all contribute to slow down the Cash Conversion Cycle (CCC). Yet, companies that prioritise their Working Capital Management and implement liquidity optimisation in their systematic operation processes will visualise “cash” culture transformation – generating more internal capital, more efficient processes, lower costs, boosting performance, and market competitiveness.

How do you transition from an organisational culture of “cash-preservation” to “cash-excellence”? Well, the CFO, Treasurer, and their Finance Teams will typically focus on Working Capital optimisation through three (3) key areas:

Accounts Receivable

Accounts Receivable ensures that your cash steadily flows into the business.

Accounts Receivable and Risk Management are a combined end-to-end process that helps to optimise and ‘unlock’ cashflow. Focus on the following Accounts Receivable practices:

  • Reducing reliance on manual processes and eliminating waste, with real-time Order-to-Cash (O2C) digital automation and Dashboard KPI’s reporting.
  • Implementing cross-functional understanding of your Credit Policy, procedures, and relevant approvals aligned to your Authorisation Matrix.
  • Standardise payment terms across accounts to build efficiency and transparency.
  • Completing risk assessment process and procure security documents to enhance ‘new’ customer onboarding experience / expectations.
  • Streamlining the efficiency of the invoicing process to reduce customer disputes and any impediment to receiving payment (due date).
  • Embed rigorous collections management by improving the processes to monitor collections, reminders, disputes, identify payment patterns (Predictive Metrics), and track account slippage.
  • Provide periodic analysis reporting (and on-time) to Sales and Operations to help tailor your customer engagements.

Accounts Payable

Accounts Payable maintains your business operations but also supports vendor relationships.

Contractual obligations define vendor relationships as overdue payment builds debt and affects working capital. Focus on the following Accounts Payable practices:

  • Reducing reliance on manual processes and eliminating waste, with real-time Procure-to-Pay (P2P) digital automation and Dashboard KPI’s reporting.
  • Implementing cross-functional understanding of your Accounts Payable Policy, procedures, and relevant approvals aligned to your Authorisation Matrix.
  • Improving vendor management by tracking performance over time.
  • Improve payment discipline by streamlining internal vendor payment processes
  • Improve timing of supplier payments, methods, and by prioritising invoices.
  • Standardise payment terms (your benefit) but also look to increase vendor trading terms to take advantage of cashflow improvements.


Inventory stability can be challenging for Procurement Teams but critical for maintaining sustainability.

Dealing with responses to inventory shortages, Finance Teams need to understand how vendors manage their supply chain processes. Focus on the following Inventory Management practices:

  • Reducing reliance on manual processes and eliminating waste, with real-time Source-to-Pay (S2P) digital automation and Dashboard KPI’s reporting.
  • Capture data for better decision making capabilities and increase your end-to-end visibility into vendor management.
  • Build resiliency in your supply chain by reviewing and improving processes to uncover any risks for future disruption.
  • Focus on core product lines and oversee catalogue product management to simplify your operational efficiency.
  • Streamline procurement processes by improving supplier relationships and leverage your negotiating power.
  • Pursue inventory reduction opportunities, identify, and rationalise underperforming SKUs but without compromising on customer service levels or risking stock outages.


Culture really is “key” for CEO’s and CFO’s wanting lasting results from their efforts to encourage better Working Capital Management. The culture of any business is curated from shared values, ethics, and a mission that ties everyone in the organisation together and promotes engagement. All successful Working Capital approaches begins with the creation of an overall organisational strategy and vision, which in turn drives policy framework.

The key to success lies in embedding the right behaviours across the whole business, not just in Finance, but driven by Executive Management with a sustained focus on change and future financial success. With establishing ”cash-excellence” culture, Working Capital optimisation must be a cross-functional collaboration to establish accountability amongst stakeholders, teams, and employees. This ensures commitment, but with a sustained focus on long-term business decisions and strengthening the awareness of a ‘cash culture’ across the organisation.

This article was a Guest Author contribution and collaboration with CreditorWatch.

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