Process Mining enables CFOs to drive rapid cash impact and working capital improvements – here’s how

Working capital management is already part of the bread and butter of any and all finance leaders looking to drive profitability and maintain financial stability. However, the need for rapid improvements is now more urgent than ever before, driven by a combination of external market pressures, economic volatility, impending recession, inflation, and increasing regulations. Yet CFOs and their teams struggle to deliver the results they need, fast.

Let's look at what's holding them back, how to overcome it, and what CFOs can do to unlock hidden value in their Accounts Payable (AP), Accounts Receivable (AR), and Inventory processes.

Make that cash flow faster – not a sprint but an obstacle course

Given the immense strain that external factors place on companies, rapid improvement is critical to stay ahead of the competition, manage risk, and ensure financial resilience. While the urgency is clear, many CFOs run into a wall of internal challenges that prevent them from unlocking working capital at the speed that’s needed.

There are thousands of opportunities hiding in their AP, AR and Inventory processes that can be unlocked by deliberate, targeted process optimization to improve DPO, DSO, and DIO — and ultimately working capital.

But fragmented system landscapes, increasing complexity, and shifting regulations create barriers that make it difficult for finance teams to identify and effectively capture these opportunities. Where should they start? How can they gain transparency? What will have the biggest impact? All these questions demand answers that have been notoriously hard to come by – until process mining entered the scene.

Unlocking value opportunities with process mining

Over the last decade, process mining has made its way from the academic into the business world, firmly cementing its place as a valuable business technology with the first-ever Gartner Magic Quadrant for Process Mining.

With process mining, CFOs can gain near real-time visibility into their organization's processes, regardless of their complexity. There are many technologies out there that promise to make your working life easier but add more complexity to your systems. And more complexity is the last thing any CFO needs right now.

Process mining is different because it layers on top of your existing systems and creates a place where all the information comes together in a data-based, real-time view of your actual processes. Leveraging process mining gets you a one-stop shop to uncover deviations, missed opportunities, and compliance violations that put a dent in your working capital. Then, advanced AI and Machine Learning help you to prioritize the biggest opportunities and equip you with the tools and recommendations to take targeted action.

If that still sounds too good to be true, let’s look at an example.

Working Capital improvement at IQVIA

Born from a merger, healthcare innovator IQVIA had to deal with many of the challenges CFOs are facing today:

• a highly complex ERP system landscape
• a team forced to navigate three source systems to validate invoice accuracy against negotiated payment terms
• limited cross-system interoperability making it difficult to validate master data in real-time and expose operational risk

Leveraging process mining, the company identified and fixed payment term misclassifications in their Procure-to-Pay process resulting in a 32-day adjustment of their days payable outstanding, and ultimately freed up $600K of working capital (with $280K working capital improvement in the first month of go-live).

And that's just the result of actioning one opportunity; they've also had breakthrough successes in DSO and overall cost reduction.