Working Capital Management

Leverage procure-to-pay automation solutions to optimise your working capital positions and make a direct impact to the bottom line.

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Basware can help you transform your finance department from a cost center into a profit generator.

Are you looking to improve your balance sheet, generate savings, and optimise cash flow? You can drive savings by reducing processing costs with more automation, capturing more early payment discounts, and optimising days payables outstanding. 

What is Working Capital Management?

Working capital management is defined as monitoring and optimising company assets and liabilities to ensure the most efficient business operations.The process consists of strategically managing outstanding customer invoices, outstanding supplier invoices, and the value of inventory to ensure the business has the right amount of cash on hand. 

It requires balancing between two extremes: 

  1. Increasing liquidity and mitigating risk while decreasing overall profitability due to higher inventory and financing costs
  2. Decreasing liquidity and funding costs while increasing costs OR moving financial risk down the supply chain to a vendor that is not able to carry it 

Working capital optimisation is managed by analysing company operations through the Cash Conversion Cycle – the time it takes to convert stock of raw materials into a “work-in-process” status and then finally finishing the product to be sold – to understand where more cash is needed and where excess cash can be reinvested. 

Role of Treasury in Working Capital Management

Treasurers are in a unique position to deploy a working capital optimisation and payments strategy in collaboration with procurement and finance. This requires automating tactical operations by removing manual tasks from day-to-day operations. It also requires establishing an end-to-end view of cash and risk positions while closely integrating supply chain management.  

When treasurers become corporate-wide owners of the working capital strategy, they can do the following: 

  • Get 100% spend visibility 
  • Support strategic procurement & facilitate collaboration 
  • Increase the ROI of automation solutions  
  • Reduce exposure to fraud 
  • Prevent financial strain on the supply chain with the right solutions 

How Basware Can Help

By helping organisations automate and streamline their accounts payable and procurement processes, Basware offers excellent working capital opportunities in the form of electronic payments, early payment discounts, and days payable outstanding (DPO) optimisation. By layering the financial data collected with actionable analytics, businesses can make the right decisions to release funds for self-financing projects, acquisitions and growth plans, or to finance their discount programs to save in purchasing costs. 

Gain 100% Visibility into Spend

Being more effective in working capital optimisation starts from gaining access to real-time spend information for both direct and indirect spending. Basware solutions, layered with robust analytical capabilities deliver real-time visibility into 100% of spend, enabling treasurers to understand underlying business dynamics and give accurate guidance to both CFOs and procurement to optimise contracts and inform payment strategies. 

Increase Capture of Early Pay Discounts

Treasurers can also help finance and procurement work together to secure early payment discounts to increase savings. The improved shared process not only opens access to amounts of cash previously tied up in business operations, but benefits the workflow of the entire organisation, reduces possibilities for errors, and supports addressing the corporate social responsibility objectives of the company.

Reduce Exposure to Fraud

With Basware P2P solutions, organisations are in a better position to reduce exposure to fraud across the organisation. With electronic procurement and accounts payable automation, everyone works with a sole set of data through all the integrated services. As business documents are no longer handled manually, and audit trails are integrated into the service, tampering with business documents becomes extremely difficult. Duplicate invoice checks and supplier validation capabilities further reduce the occurrence of fraud.

Improve Cashflow Forecasting Ability

With actionable analytics easily available in real-time, finance professionals can pivot company financial decisions based on real-time data. This all puts financial decision-makers ahead of pending payments and expands the planning horizon to the moment when the purchase is approved – not after the fact when a surprise invoice arrives. When a company can more easily predict the timing of cash needs, excess cash can be put to better use even during short periods of availability.  

"It's easier for our suppliers and customers to do business with us. With Basware, we have been able to unlock valuable time and financial capital back into our systems to give our fund managers a more competitive advantage."

Mike Tweedie, IT Applications Manager, TH Real Estate


100% Spend Visibility

With a breadth of procure-to-pay solutions, advanced automation functionality, integration capabilities, and the greatest global reach, Basware is uniquely positioned to deliver 100% visibility into your organisation's spend and suppliers. We deliver 100% spend visibility through 100% supplier connectivity, 100% data capture and 100% user adoption.

 Flexible Discount Programs

Set up early payment programs for different suppliers with terms and timelines that suit both them and you. Recruit suppliers to payment programs easily online to get paid early. Leverage Basware’s supplier enablement services to improve supplier on-boarding and your time to realised value. Offer suppliers an option to choose when to take payments depending on their cash flow needs, so you're supporting their growth and innovation efforts. 

Dynamic Discounting

The “dynamic” part of a dynamic discount program means that the amount of discount is determined daily based on an agreement between you and your supplier which allows you to receive the maximum discount on approved invoices by paying on the earliest day possible and a moderate discount on invoices paid a little later. So, the faster you pay, the higher the discount you receive. 

On-Demand Dynamic Discounting

On-demand dynamic discounting is just how it sounds – it’s available and suppliers take it when they need it. This enables them to hand-pick which invoices they want to receive early payment on. If they need cash on-hand, they accept the early payment and you get a higher discount. If they can wait longer, they accept payment at a later date and you get a lower discount. On-demand dynamic discounting offers a more tailored and flexible payment plan to meet suppliers’ needs, helping to build stronger supplier relationships, support their cash flow needs, and ensure supply chain resilience. 

Steps to Optimise Working Capital

Working capital management requires automating tactical operations by removing manual tasks from day-to-day operations. It also requires establishing an end-to-end view of cash and risk positions and closely integrating supply chain management. Here are five steps that will put you on the path to working capital optimisation:

Get 100% Spend Visibility

Being more effective in working capital optimisation starts from gaining real-time spend visibility across all your procure-to-pay processes.

Strategic Collaboration Across Silos

Finance, procurement and treasury departments needs to work together to identify strategic suppliers, negotiate early payment discounts and optimise days payable outstanding (DPO).

Increase the ROI of Automation Solutions

Automating procure-to-pay processes improves efficiency of both the buyer and the supplier. By including working capital programs, dynamic discounting, and e-payments as a part of your P2P strategy, you can produce a substantial return on investment of your automation solutions.

Reduce Exposure to Fraud

With automation, organisations are are in a better position to reduce exposure to fraud across the organisation. Automation also ensures that everyone works with a single, centralised set of data through all the integrated services.

Reduce Financial Strain on the Supply Chain

Services that release cash from operations without causing financial strain upon the supply chain are key to working capital management. These services maximise cash flow when needed and help put existing excess cash and newly released cash to better use.