Cash May Be King, but Efficiency Also Rules

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					 feature story                                                                                                                                                                                 Financial Supply Chain



Cash May Be King, but Efficiency Also Rules
Future Electronics improves its account receivables
efficiencies while also ramping up its cash management
By Editorial Staff



C
        ash is king, whether the economy is in            “Even companies with strong brands, reliable
        boom or bust, and that reality has put a       customers and good products can be hit hard by a
        premium today on companies’ ability to         prolonged and unexpected cash crisis,” says Mark      Increasing A/R Efficiencies                            and passive, interconnect and electromechanical
drive improvements in how they manage accounts         Tennant, president of REL, which is a division of        CJ Wimley, executive vice president of corporate    components, and the company experienced rapid
receivable and payable (A/R and A/P) in order          The Hackett Group, in commenting on the study,        solutions with solution provider SunGard Avant-        growth over the past 10 years, expanding to about
to better manage their cash position. At Future        “Blueprint for a Cash Culture.” “Fear may be re-      Gard, notes that cash management is particularly       170 locations in over 40 countries.
Electronics, the Pointe Claire, Quebec-based           ceding as the global economy begins to improve.       critical when credit is tight and companies are try-     The company’s brisk expansion presented two
distributor of semiconductors and electronic           But with shrunken sales and smaller margins,          ing to minimize the need to turn to lenders. “One      challenges for its credit department, according to
components has achieved significant efficiencies in    it’s tougher than ever for companies to protect       of the greatest sources of funds for organizations     Joe Prudente, vice president of worldwide credit
its A/R process that have driven cost savings to the   themselves from cash risks. Unfortunately, many       is their own trade receivables, and they need to       for Future Electronics. First, the company’s credit
bottom line while also improving the company’s         companies simply don’t know how to do this.”          be focused on getting those collected in a timely      staff was challenged to handle increased business
overall cash management and its risk management.          The findings from REL’s “2009 Working Capital      manner, according to the terms of the original         without adding headcount. While only 1-2 percent
                                                       Survey” bear out Tennant’s last assertion. The 11th   business agreement between buyer and supplier,”        of receivables were disputed in any given month,
Money on the Table                                     annual survey of working capital performance by       notes Wimley, whose company offers software and        the company’s high volume of business still meant
  Senior executives at a variety of companies          the top 1,000 U.S. public companies did show          processing solutions for financial services, higher    that thousands of disputes had to be managed
clearly have cash management on their minds            that, at a high level, U.S. firms improved their      education and the public sector.                       monthly, and that figure would only rise as the
these days. In fact, nearly 95 percent of the Glob-    working capital performance by 6.4 percent in            Future Electronics has been working with Sun-       business grew. In addition, rapid growth left the
al 1000 companies that participated in a recent        2009 agai
				
DOCUMENT INFO
Description: Future Electronics initially tapped SunGard's AvantGard Receivables for its North American operation. The solution includes a rules engine that categorizes customers based on credit risk.
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