Supply chain management is a complex practice and problems related to cash management only add to the overall risk. According to a survey, more than 80 percent of supply chain managers have expressed that their supply chain and other related functions get significantly affected by lack of working capital, especially during the current credit crunch. In an effort to preserve capital, some companies have unilaterally decided to take longer in paying their suppliers thereby disrupting the integrity of the supply chain.

For instance, the UK government has assertively tried to tackle the issue of late payments and has been one of the first countries in Europe to do so. However, the condition does not seem to have advanced significantly.  Recent research shows that collectively, UK SMEs are now owed almost £16 billion in late payments – an increase of £5 billion from two years ago. Delay in payments can invoke a bigger problem for SMEs than larger companies especially since SMEs likely face major cash flow issues during a crisis situation. It is, thus, essential for SMEs to have a mature cash flow management system in place.

In addition to a deliberate attempt to delay payments, factors like manual processing of transactions trigger slip-ups and heightened time consumption. Valuable time and money can get dissipated in managing supplier information and payment follow-ups. In paying supplier invoices, businesses have to contend with many different payment destinations, banking systems and different payment types, often having to cope with multiple payment platforms and multiple log-ins.

Hence, leaner and more efficient supply chain management is called for. During the past couple of years, the recession had forced businesses to focus on immediate cost cutting measures which have definitely rendered temporary relief. Of the three key elements of supply chain working capital, namely, payables, receivables, and inventory, supply chain managers tend to focus on inventory. Yet, to sustain, a broader perspective to increasing efficiency is more than a requirement now – in order to minimize working capital requirements, it is important to employ a more coordinated approach towards all three areas. Optimization of the financial supply chain is a key strategy to most executives in an effort to successfully conduct cash management, which had been long ignored.

Supply chain management and payment processing solutions in the market have presented statistics that imply that transferring a firm’s supply chain online helps reduce costs, helps allocate and optimize resources, and furnishes a better view of short-term assets and liabilities, which ultimately facilitates strategizing, considering alternate supply chain management financing options, and risk management. An enterprise-wide integrated online system allows automated processing and saves companies up to 80 percent in costs.