How to Achieve Working Capital Optimization

Working capital optimization is important to businesses of all sizes. Adequate levels of working capital ensure companies have enough cash and liquid assets to pay short term debts, liabilities and operating expenses. With a sufficient amount of working capital, companies can improve earnings, maintain growth, optimize inventory and attract investors.

Using Technology and Automation to Improve Working Capital Optimization

Optimizing working capital can be very complex and challenging for the majority of organizations. One of the main reasons is an overreliance on paper-based invoicing and accounts payable (AP) processes.

Traditional paper invoices are costly and difficult to manage with lengthy approval and payment cycles. Companies can improve their working capital by automating AP processes and using technology, such as e-invoicing, specifically designed for the financial supply chain.

There are several working capital benefits companies can achieve with automation and technology:

  • Improves Accuracy and Visibility: With invoicing automation technology, companies can make sure their customers are paying invoices on time and increase working capital. One of the most common sources of late payments is inaccurate invoices. Invoicing automation technology, such as automatic invoice scan and capture, eliminates inaccuracies in invoices and receipts caused by manual data entry. Direct Insite’s PAYBOX® solution ensures accuracy of invoices as well as provides visibility into payment trends and analytics for managers and executives to further optimize working capital.
  • Stronger Supplier Relationships: With ePayment technology, companies can pay suppliers in a timelier manner and improve supplier relationships. This can give buyers more leverage in negotiations with suppliers, which can in turn increase their working capital. Strong supplier relationships will also ensure you receive goods or services on time.
  • Streamlines Payments Process: Invoicing and payment automation technology reduces the time spent by AP staff on manual invoice data entry. Automatic processing of clean, error-free invoices that meet certain pre-defined criteria can free up time for buyers and AP staff to manage exceptions and accelerate dispute resolution with suppliers.
  • Increases Discounts: According to PayStream Advisors, at least half of organizations miss out on 50 to 70 percent of discounts offered by suppliers. This is because their AP departments cannot approve and pay invoices within 10 days, which is the timeframe required for most supplier discounts. By automating invoicing, companies can reduce their average invoice cycle time from 23 days down to five and ensure they capture every available discount to increase cash flow and working capital levels.
  • Greater Compliance and Security: Payment security and invoice tracking are important concerns in today’s modern enterprises. With payment automation technology, companies can avoid the risk of lost or damaged invoices. Companies can also protect cardholder data and prevent payment fraud by employing a Payment Card Industry (PCI) compliant invoicing solution.

Working Capital Optimization Solutions

Direct Insite’s PAYBOX® is a powerful tool that helps companies fully automate accounts payable workflows. As a PCI compliant technology, Direct Insite’s PAYBOX® is a feature-rich, ePayment platform that helps companies enhance customer relations, accelerate credit and collections and improve working capital optimization.

An all-in-one destination for AP professionals and financially-savvy organizations, the PAYBOX® portal supports the secure disbursement, receipt and processing of payments via credit card or the Automated Clearing House Network. Users can pay one or more invoices through the portal and access real-time payment remittance information and data to help them make more informed financial decisions. To find out more information or receive a personalized consultation, call us at (631) 873-2909.

Working Capital Management