The Importance of Transitioning from Cash Preservation to Cash...

The Quintessential Technology Source for Corporate Financial Professionals

The Importance of Transitioning from Cash Preservation to Cash Excellence

CFO Tech Outlook | Tuesday, August 17, 2021

The Importance of Transitioning from Cash Preservation to Cash ExcellenceBusinesses can leverage their early response to the epidemic to strengthen their cash management capabilities.

FREMONT, CA: Amid the pandemic's economic fallout, the current cash crisis can focus on long-term cash excellence, supported by a robust cash culture from top to bottom. During the pandemic, boardrooms have changed their attention from EBIT to cash. This includes anything from CFOs managing the books to warehouse managers purchasing spare parts to accounts payable professionals making payments. Cash excellence requires a cash-focused culture across three dimensions: people, structure, and processes.

Developing a strong cash culture across the aspects of people, structure, and process


Top 10 Cash Management Solution Companies - 2020Cash culture begins at the top. CEOs and CFOs must lead by example by prioritizing cash. The role of cash in value creation and resilience during a downturn is consistently communicated to employees. Capital efficiency measures and financial measures (like cash conversion cycle) are equal.

A multibillion-dollar industrials firm focuses on cash to rise to the top quartile. That year, the corporation successfully released about $150 million in cash in six months. The CFO constantly reminded staff of the company's value proposition.

A combination of top-down and bottom-up messages will help employees comprehend the worth of cash and make decisions that balance P and L and cash.

Many businesses consider cash management a financial chore. Finance, for example, should not manage receivables alone in cash-focused organizations, businesses, and finance own cash performance.


A recurring agenda item for top management and finance leaders should be cash, with clear accountability. Leaders must establish a regular cadence and structure to avoid actions aimed just at quarterly or annual results. Some companies construct a financial war room to focus their governance and rush on saving cash. As these organizations shift to the new normal, they should adopt the rigor of cash-war-room management.

One family-owned business built a cash war room with daily hour-long sessions chaired by the CFO to increase cash flow quickly. In just eight weeks, the company saved €30 million and decreased its late accounts payable in half, regaining supplier confidence.

Accountabilities should be defined at all levels. Decision-making authority should be outsourced to the lowest level practicable, with effective escalation to the CFO for cash-flow concerns. Each process from source to invoice, procure to pay, and overdue management should have an owner who can enhance its effectiveness.


Companies must identify cash KPIs, set clear targets, and guarantee that the CFO monitors them. Matching KPIs to levels is crucial. For example, top-level KPIs include return on invested capital (ROIC), working capital as a proportion of sales, and cash conversion cycle. In contrast, front-line KPIs include a percentage of overdue and early and late payments. Prioritizing daily decisions requires a clear and workable policy framework (for example, a “price tag” for capital to manage the trade-off between price discounts and payment conditions).

See Also: Top Banking Technology Solution Companies

Weekly Brief