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Will Corporates Disrupt the Financial Services Industry?

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Organizers from the Finance Transformation Summit 2019 sat down with Ravi Tanniru, Managing Director, C2FO to discuss his perspective on the role technology plays today and in the future for CFOs and their ability to accelerate results tied to their goals.

Q: What is the common thread you heard from CFOs during the conference and how is that similar or different from CFOs you regularly meet with?

A: ‘Future-proofing business’ is a common theme shared across the Summit’s attendees and the CFOs that I meet with regularly. Each of them – regardless of industry, geographic imprint or company size – are looking for low-risk approaches and best practices that can deliver on their finance team’s needs as well as the needs of the business.

Q: Tell us your perspective on the most interesting key takeaway from the Summit’s presenters? 

A: One of the interesting points discussed was around data. Consumer patterns have changed over a period of time and companies are creating everlasting experience by analyzing the available data. While primary KPI for CFOs is enhancing working capital, the availability of ample amount of data internally pose myriad opportunities for them, all with unique potential. Scrutinizing this large data which is segmented across SBUs also provide multiple business opportunities to CFOs. This data analysis also helps them to free up working capital and optimize cash flows.

Q: How do you recommend CFOs involve other internal departments to support finance goals? 

A: Find common ground with one another; this is the key to mastering influential engagement across internal departments. Just like in any relationship, finding what you have in common is the best way to open lines of communication. For example, if you’re looking to find cost reductions, the first step is to identify which departments hold cost savings as a primary KPI, then initiate a conversation that leads with achieving that goal. Our most successful customers partner with multiple internal departments, including procurement, shared services, treasury and IT, to ensure everyone is a part of the decision making process. The value in this approach is found in quick success, as everyone understands their opportunity and their role.

Q: CFOs expressed their concern on growing liquidity challenges and are considering options other than traditional vehicles. Your views?

A: For CFOs to succeed in the future, they will have to adopt new means of funding their business and their supply chain. The volatility in local non-banking markets is just one proof point that demands no-risk cashflow solutions become available for everyone to conduct business freely and efficiently. I’m proud to be a part of an organization that has been recognized in India, Europe, Southeast Asia and the U.S. for providing affordable and consistent cash flow to businesses small, medium, large – even enterprise-sized. As we see interest rates adjust in the near-future and a tightening of credit markets, liquidity solutions for businesses across India will become even more vital.

Q: According to you, what is the next disruptor in finance and risk management for corporates?

A: Corporates themselves will disrupt the finance industry as they are provided more and more ways to reduce their risk and take control of their cash performance. The leaders today are utilizing their balance sheet to fund their supply chain – driving not only margin improvement for themselves, but much needed liquidity to their vendors. With the advent of funding networks – like those provided by C2FO – corporate balance sheets achieve unprecedented levels of control and flexibility.

Q: What working capital challenges do you foresee for Indian corporates? What are the possible solutions?

A: Like it or not, Indian corporates are compared to the successes of their global competitors. If Indian corporates lag behind in their adoption of innovative finance technologies, they will have a difficult time catching up. Many corporates already compete with expansive supply chain networks of their peers headquartered in the U.S. and China, so anything they can do now to gain a competitive advantage can help level the playing field. One such example is a simple revisit of their working capital strategy to maximize the potential of their cash, yield and investments. These CFOs should be asking themselves if their cash position is working as hard as it can. If they haven’t even explored the alternatives – now is the next best time to rebalance. A mix of supplier financing solutions is an easy way to start because most corporates have these programs in place; however, they do not have the right mix to produce bottom line improvement. When we meet with corporates, we analyze lost yield opportunities in underperforming working capital. For example, if you allocated 70000 Crs in vendor financing and gained a 200 bps yield, then you missed out on earning 900 bps with a market-driven vendor financing model with C2FO.

Q: How to build flexibility in the way businesses operate in India after evaluating likely risk in financial decision making?

A: The best way for CFOs to add flexibility into their finance decisions and mitigate risk is to adopt the innovations already deployed by their global counterparts. By adding technologies that do not rely on credit ratings, underwriting, fees and traditional financing processes makes every CFO more nimble. A perfect example is from our customers who leverage the C2FO early payment platform from two differing perspectives based their balance sheet needs – either A/P acceleration or A/R acceleration. Leveraging both of these assets simultaneously or individually can control your DPO, DSO, EBITDA and EPS metrics. One of the world’s largest information technology companies gained $1.50 in EPS from the efforts of C2FO alone. Adding financial tools into the mix that support a CFO’s changing business climate is the most effective method for reducing risk and adding shareholder value.

Q: During your session, you advised corporates to take the strategic initiative to connect with suppliers and also optimize their working capital. Can you elaborate?

A: Businesses are looking for ways to implement solutions today that will set up long-term sustainability, whether that means weathering a looming recession, beating out competition or massive growth organically or through M&As. An often overlooked but critical element to that strategy is the strength of a business’s supply chain. These vendors are the crux of a business’s ability to deliver, so corporates have to engage them as partners and bring them along for the long-term plan. Having thousands of partners on your side is better than having thousands engaged in transactional relationships. We ask our customers to think through the lens of their vendors help identify how they can support their businesses in a way that inherently improves their own. Liquidity is the common denominator across all, so a working capital solution like C2FO that improves cash positions for everyone involved becomes not only the easiest solution available, but the most rewarding.