Case Study: Optimising BT Global's Cash Management

by Catherine Yu, BT Global, 15 June 2011

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topics:
Cash and Liquidity Management Finance and Banking

tags:
accounts payable accounts receivable business process outsourcing global finance platform Shared Service Centre working capital management

BT Global Services has a very aggressive plan to grow the business in Asia Pacific. However, we have so many legal entities using different processes, different ERP systems, different banking platforms and non-standardised reporting practices that it has become very difficult to maintain visibility into financial information.

In order to ensure that we have steady cash flow to develop the business, our goals must not only be focused on profit generation, but also on working capital management. It has become clear that we need to implement unified financial standards and systems across the whole region to achieve our business goals.

We know that the effectiveness of working capital management will impact our business in two important ways:

It will allow the company to transform profits into cash in a quicker manner, which in turn could be used to fund other initiatives

It will provide senior management with improved data on company finances and enable them to make timely decisions

Our move to focus on working capital management also coincides with a top-down message from the BT CFO, which was shared with all functions: ‘Cash is King.’

Uniform KPI

To achieve our mission of improving working capital management, it is important to have solid infrastructure from which we can achieve maximum efficiency. This efficiency would be driven by implementing an effective cash management information system.

When we started planning the project about three years ago, we applied a metric system to quantify improvements in working capital management on inventory, prepayment, accrued revenue, receivables, payables, accrual and deferred revenue. The typical key performance indicator (KPI) of days sales outstanding (DSO) on accounts receivables – a measurement of the average collection period for receivables – was applied to track the effectiveness of debt collection and credit management.

In a company with many different stakeholders, it can be hard for the message to take full effect. Although having a steady supply of cash in the bank is a constant concern for a treasurer, it might not mean the same for employees in other roles, especially for staff whose performance is measured on the basis of their ability to increase profits or bring in revenue.

We found that the existence of a uniform KPI helped encourage employees to work together towards a shared goal.

Setting Standards

To put in place a standardised process across all entities, we carried out a series of inter-related projects that shared the aim of unifying diverse practices into standardised procedures. These are:

Business Process Outsourcing: Day-to-day transaction work, such as accounting transactions and payroll processing, were outsourced to our BPO partner. Before the work is to be migrated, we first implemented a uniform approach for these routine transactions, so that the outsourcing process itself could be streamlined across the region.

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