CloudTrade Podcast - Episode 10 - Finance transformation

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Reading Time: 9 minutes

Watch the podcast here, if you’d prefer to read about what was discussed, please read on.

Steve Britton, Director of Sales, talks to CloudTrade’s Alliance Director Jeremy Phillips about finance transformation and its impact on business outcomes. They discuss how this ties in with CloudTrade’s vision of creating a world of frictionless digital trade through the fast, accurate and automated extraction of data from commercial documents.

Steve: Jeremy, welcome to CloudTrade TV podcast as I affectionately call it. This is, I think, number 10 in the series that I've been running so far where I'm talking to colleagues within CloudTrade about their experience, and about certain salient topics to do with our industry. Topics that we hear about from our customers about how we can help them with various challenges with processing inbound business documents.

The context of today is finance transformation. Delighted to welcome you on this call and I have just noticed that we're both sitting in the same virtual room. So, good choice there! And what I think would be a good starting point, Jeremy, is for the listeners to understand a bit about Jeremy Phillips. What's your background, what gives you the experience and ability to talk about finance transformation? If you could just help us put that into context, that would be wonderful.

Jeremy: Thanks, Steve, and pleasure to be here and glad I made the top ten! That's good. My background is that I spent just over 20 years in and around ERP systems, purchase to pay systems and I've had opportunity to work with a large number of different systems, different sectors, different business types. But the key thing has been all of the projects that I have been involved in from a delivery aspect, and at a requirements-gathering stage, have all been around delivering transformation, either at an organizational level, with a benefit that might cover the entire organization or departments or teams, and sometimes they're focusing on specific processes as well. But it's always been about the end to end. I've always been involved at the initial stage, exploring the gathering requirements, all the way through to the delivery stage.

Steve: Just put that into a bit of context, Jeremy. When you say finance transformation, it's a big subject, and in my mind, and I've talked a lot in the previous podcast about capturing data off inbound documents, and I suppose that's the bedrock isn't it? It's the foundation for finance transformation from the point of view of if I'm receiving a supplier invoice I need to pay, or if I'm receiving a customer order in that I need to transact and deliver the goods or services, and all of that in a timely manner. But taking that into the broader context then, stepping away from pure data capture, we've got the information now in our systems, what can we do with it then to enhance finance transformation?

“…all transformation requires change, but not all change is transformational.”

Jeremy: So, as you say, it's a broad topic, as soon as you start talking about transformation. But I think the key point is that transformation isn't new. This isn't something that is just emerging now. And I don't think it should ever be seen as an end goal either. We're always looking for continuous ways to improve, within every organization, within every department. There's always this desire to streamline a function or to lower cost or offer greater insights into data, enable collaboration, or whatever the outcome is, it shouldn't be seen as the end goal. And the other thing, there's a bit of a cliché that goes with it, but all transformation requires change, but not all change is transformational. I think it's quite important to actually focus on what the objectives are and what the bigger picture is, and in the context of finance transformation, a lot of people will think about overhauling an entire system, so replacing an ERP to deliver transformation.

Steve: Right.

Jeremy: If you think about the sort of changes that are made at that more organizational level, where many different departments are impacted, you don't always see benefits within maybe in each department and in each area, so there might be operational change that actually needs to happen to enable the broader transformation or digitization to actually have even greater benefits. And if you think about the strategic requirements, those will often be met by finance transformation, but operationally that sometimes is a bit of a blocker.

“… CloudTrade is all about streamlining to drive reduction in manual processing…”

And I think that's where CloudTrade comes in. So CloudTrade is all about streamlining to drive reduction in manual processing, and reduce processing time, but also without having to alter and impact the sending organization's ability to transact digitally with a particular buyer, or the other way around. So a lot of the time it can be automating volumes of documents very quickly, usually within a few minutes, but again with 100% accuracy, to make sure that the data that's coming in, the capture if you like, or the data extraction, meets all of the requirements of the receiving party to make sure that all of the validations are done, to make sure that the data that we're extracting actually drives downstream processing as much as it does point of capture.

“… when you start to capture … accurate data, that starts to drive real change behind the scenes…”

Now when you start to capture accurate information, accurate data, that starts to drive real change behind the scenes because people do get more insight into data, people are able to understand a little bit more about where this might go. When you start to think about contracts that are in place, dynamic discounting, prompt payment, etc., all of these KPIs and factors rely on accurate data, but also on being managed very quickly and very efficiently, and I think that's where the CloudTrade element comes into finance transformation.

Steve: Absolutely. Really interesting subjects and topics that you have just highlighted. A couple of things I just like to focus on. I'm always very, very keen, whenever I've engaged with an organization, to have a clear understanding of the required business outcomes and that should be something that we can measure. Where are we today and where do we want to try and get to? And in the journey, whatever that transformation may be, you can measure it and do checks and balances. Because, without that, how do you know that you have actually delivered against your business objectives? And the other thing that you touched on there was around dynamic discounting and supply chain financing which works hand in glove with dynamic discounting.

I remember many years ago presenting to a group in Dublin talking about settlement discounts. This must have been probably 15 years ago and it was, to the audience anyway, and it was quite a large sector of different businesses within the Republic of Ireland, taking an early settlement discount was something that was alien to them and they hadn't really understood it. And back in the context of finance transformation, if I receive an invoice and I process it on the day of receipt, so it's sitting in my system and I can pay, if that supplier offers 2% for 10 days or as with my old industry, many years ago, I was in the building sector, I was getting up to 10% discount for making payment early, that is a significant benefit. Most organizations, if you ask the question, “If I pay you early, can I have a discount?” In most cases it's going to be “yes.” Having that ability, having that transformation program that says I'm going to receive, I'm going to extract, I'm going to put this data in my back-end system, so I can take advantage of dynamic discounting is critical.

Jeremy: Absolutely I 100% agree.

“… that collaborative approach through the finance transformation model … is so so important.”

Steve: And part of that, just interested in your thoughts around something I'm really keen on is managing the health of your supply chain. If I'm manufacturing something, be that a food product or engineering or whatever, without more raw materials I've got a problem and I have to therefore look after my supply chain to ensure that I've got that effective delivery of goods and services, so that if I work collaboratively with them and talk about their cash flow as well as my own cash flow, that collaborative approach through the finance transformation model you just talked about is so so important.

Jeremy: I couldn't agree more, and I think more so now than ever before as well. Because if we think about the availability of some of the goods, lead times can be changing, delivery times are changing,

transportation costs are moving around. You're absolutely right. I think it is more critical now to have a healthy supply chain and a healthy relationship on both sides than ever before. And it's funny you should talk about some of the topics you just touched on there.

“CloudTrade's vision is creating a world of frictionless digital trade.”

CloudTrade's vision is creating a world of frictionless digital trade. And that goes both ways, you know. So as a receiver of a purchase order, if I'm buying an item and I can send out an order digitally and I know that it can be received digitally, processed quickly without any intervention, completely accurately as well, those goods can be picked and packed much faster than they would have been if there had been manual processing involved there as well.

“There might be a small percentage, but if you look at it as the volume of trade, it can be significant.”

And, on the flip side of that, with the invoice coming back in, again it makes sense if the supplier can send a digital invoice but without having to change any of their processes or fees, or introduce extra fees, and for the buyer to be able to process that invoice quickly. If all of that process can happen potentially within 24 hours of the order going out, the invoice is back, the goods are en route, or even received, then you've got opportunity there for some of that dynamic discounting that you're talking about. And the percentages that you can gain are quite significant sometimes. There might be a small percentage, but if you look at it as the volume of trade, it can be significant.

“… what we're trying to enable within CloudTrade is making documents and the data within them more accessible and more useful for the entire business.”

It is important to recognize that it's not going to be an overnight success if you look at some of the more traditional methods of dealing digitally with your supply chain, but actually what we're trying to enable within CloudTrade is making documents and the data within them more accessible and more useful for the entire business. And that's both sides. It is about driving that change. Moving forward all the time.

Steve: Absolutely right, and just looking at the time we'll conclude in a moment, so I'll just ask you to think about what are the five big topics that you would recommend to an organization that was considering finance transformation? I'll give you a moment to think about that.

Concerning document processing, as you've just discussed with regards to inbound orders or inbound invoices, it's about having the ability to extract data off that document, and process it, so that when it's received the recipient can trust the quality of that data to enable them to manage – effectively automatically with no human touch - the transaction. And you're right, that's exactly CloudTrade's operating model, and it has been from day one because of our unique approach. So back to my final topic. What are those five things or if you can't think of five, your top three items, that you would recommended an organization focuses on to start that journey of finance transformation?

Jeremy: There's probably an awful lot, so I'll try and keep them short and relevant.

Define the scope

If you're looking at finance transformation, define the scope of the project, and don't try and achieve too much necessarily in part one, because otherwise you'll find that some of the other components start to breakdown.

Get people involved

Secondly, I think is to get the buy-in of all of the operational departments as well. We're in a world where everybody is talking about moving workloads to the cloud. They're talking about SaaS. But quite often there will be certain functions that are left behind and that can really impact the overall success.

Look at the data

So, define the scope, get people involved, then start to look at the data, and the detail. Don't necessarily try to enable 100% of your supply chain overnight. Maybe target the top 80% or 90% as these are the ones where there is benefit for all. There are benefits for both sides, and they'll start moving towards that goal there.

Engage with an organization such as CloudTrade

You need the engagement from organizations such as ourselves. We enter into consultations with organizations to see if there is a fit. And don't be afraid to reach out. In the current world you need to ask advice, to ask opinions, to seek guidance from your peers in other organizations as well. Because there will be people that have gone through these type of journeys before, and I think there's more information now about the success of those as well.

Engage with the supply chain

The fifth point is to engage with the supply chain as well. Get your suppliers on board. Or if you're starting to introduce a campaign where you're looking to ingest digital orders, reach out to your clients and understand if they are receptive to working with you.

“… make it easy for the sending party to transmit their documents, which is what we're all about…”

Steve: Absolutely. And thank you, Jeremy, that's really good advice and just to finalize from me: make it easy for the sending party to transmit their documents, which is what we're all about; and it's about having a measurement, understanding where you are today and where you want to get to and making sure that you deliver against that required business outcome at the end of the project.

Jeremy, it's been a pleasure as always talking to you this morning. Thank you for your time. Look forward to joining you on future podcasts.

Jeremy: Of course. Thanks Steve.

Steve: Thanks. Have a good rest of the day.