An Overview of Financial Management in Supply Chain

The holistic approach to financial management during the supply chain is essential for any business. It involves looking at the finances from when a client orders goods when the company sends the invoices, reconciliation of accounts, and the payment. The objective is to ensure efficiency throughout the entire supply chain process.

On the other hand, a relationship exists between sales and cash management. It is why financial management is critical in the supply chain. A venture can save money by cutting operating costs. With the ibp platform, it is easy to integrate the processes and monitor finances throughout the sales cycle.

How Integrated Business Planning aids the Supply Chain

An integrated business planning application can significantly improve the supply chain. It assists the procurement phase, where a business pays for items, works capital management, and takes orders as the venture receives money from the buyers. Apart from the three elements, integrating the digital s&op approach will improve the departments involved in the supply chain. It looks at the specific needs of the department and the staff.

In the next section, we will look at the three components to help you understand the impact of financial management in the supply chain.

Procurement-to-payment Cycle

Takes is when a company spends money to purchase the necessary items to produce goods. Since a business will buy the raw materials and other resources to aid the production process. An integrated business planning application will help with financial management throughout the procurement-to-payment cycle. It enables the venture to select the items they need, the delivery options, and payment methods.

Working Capital management

It can be challenging to manage the working capital. The management needs to ensure that every personnel and department gets what they need to perform their duties effectively. At the same time, the workers need to observe the timelines. Therefore, a business needs to ensure the availability of financial resources to ensure the continuity of business processes.

An efficient financial supply chain management ensures that there is money for the business to use before they receive payments on their invoices. There should not be a disconnect that makes it impossible for the process to continue. A digitized supply management platform will assist inventory management in providing goods for customers to buy. Still, it should make it easy to demand payment on previous supplies through invoicing and reminders to clients.

The balancing of assets and liabilities is what capital management is about. It helps maintain the cash flow necessary for the supply chain.

Orders and Cash Collection phase

Some similarities exist between the initial phase, the procurement-to-payment, with the stage where the company receives money from orders. However, the company will send invoices to customers and receive payments for goods. After clients pay what they owe, the application will help reconcile the invoices. Then, the finance department can collect the records for keeping and balancing books. In addition, the integrated business planning platforms help makes the process more efficient while observing the required timelines for payment collection.

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