Let’s talk about cash. “Cash is King” right now and top of mind for all CFOs and Controllers. In the current environment, P&Ls are fragile things too!

On May 21st we hosted a webcast with Gary Steadman, Head of Business Services at ABP (Associated British Ports). ABP, facilitating £149bn in trade annually, is conducting a transformation in business services under Gary’s leadership.

Gary shared how they have approached getting “process fit” in the seven months since he joined the company.

Whilst ABP Business Services gets “fitter” by the day with dynamic KPIs and process diagnostics, a compelling element of the story are the two initiatives that were originally regarded internally as interesting but of low likelihood of financial return. But Gary, and Steve Fox, who guided ABP through the process, had been here before and knew that this skepticism was unfounded.

In 90 days, and with minimal ABP effort, Gary and Steve identified and collected £250k of previously unknown credits from suppliers. This was real cash, untapped and unidentified, sitting in suppliers bank accounts just weeks previously.

If that wasn’t enough to ‘surprise’ the P&L and put a smile of the face of the CFO, in 30 days Gary and Steve had eliminated and reversed incorrectly recorded liabilities in the balance sheet, to the tune of £3m.

In today’s money that is $4m dollars of cost reversals and a welcome “P&L Boost” for the current period. This unplanned stream of funding is being used to power investments into further business improvements and transformational initiatives. This is giving ABP a head start to tackle whatever the “new normal” looks like.

We can all do the maths, but $4M to a company that turns over $1bn in revenue, is the equivalent of $40m to a $10bn entity or $80m to a $20bn entity; 3 months from a standing start.

At a time when “Cash is King”, there is no quicker way to make an impact.

With these experiences with companies like ABP, I am no longer a skeptic when I hear “your suppliers may have more of your cash than you know” or “your balance sheet liabilities may be overstated”.

These two initiatives can boost profits, reduce losses, and can fund transformational business initiatives at a time when rapid digitization is key. Additionally, they can soften the scale of staffing reductions in an economic environment as we have today. Alternatively, they can contribute to a blend of these strategies.

If you would like to watch the webcast recording to learn more, you can find it here

Cash generation and the P&L “Boost” is now a direct opportunity for Finance and GBS leaders. Talk to us if you want to know how…

Thanks for reading…