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November 2004 |
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Welcome to the November Fast Five Minutes! |
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Executive Insight - Holiday Greetings and Reflections |
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Business Optimization Insider - Increasing Operational Cash Flow to Help Fuel Business Growth |
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Recent and Upcoming Events |
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Fast Knowledge Tidbits |
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| Welcome to the November Fast Five Minutes! |
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Let it Snow! Let it Snow! Let it Snow! Ok. So maybe you don't live in the Snow and Cold belt like I do, but you have to admit - a Thanksgiving and White Christmas just wouldn't be the same without a little change in season. This issue of the Fast Five Minutes starts us on the path of remembrance, thanksgiving, and looking forward to the transition to 2005. But let's not forget about 2004 - there is still time yet to put solutions in place that can position your business for a breakout year in 2005. As we recently found presenting at the Executive ASUG series, customers realize that 2005 will require even more attention be paid to optimizing their current business processes as they are being asked to forgo major system upgrades and enhancements as they strive to increase business performance. Optura is proving to be the right partner at the right time to get this done!
About this month's Fast Five Minutes. The November FFM includes a number of articles intended to help you better understand what is occurring in the industry and available to you and your organization. Consistent with our efforts to help you understand how to get more out of your present SAP investments, we have an article from Doug Free talking about how Optura helps you generate more Free Cash Flow to fund your business growth. Give it a ready - while also joining Optura at several upcoming industry events where we'll be showcasing our products and solutions for you. We encourage you to read, respond, and comment as we're dedicated to making the FFM your gateway to knowledge and insight on how you can reduce your process time - and return more of it back to you!
Enjoy your November FFM - wand if you're living in the cold belt like me, get out the jackets and shovels as Winter is coming! See you again in December!
The Fast Five Minutes newsletter is published monthly by Optura Inc. We look forward to providing you with this information via email regularly - please let us know if there are other things you would like to see included. Contact Bob Monio (rmonio@optura.net) with questions or comments.
Enjoy your Fast Five Minutes!
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| Executive Insight - Holiday Greetings and Reflections |
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We've made it through the 3rd quarter and turn our attention towards the last stretch of 2004. As we begin the process of planning and forecasting for 2005, it's hard not to reflect on the events and happenings of '04. We have a lot to be grateful for this year at Optura. Software sales and revenue are up over 30% in a year that contained a lot of economic starts and stops. We have launched a dramatically improved new product that shipped earlier in the year (Vendor Invoice Management v1.0) and we added significant functionality in other product areas. And, most importantly, we have a host of significant new customers that represent a cross-section of some of the worlds strongest brands.
It's a pleasure to conclude that our goal of offering products that are designed to improve a customers working capital and increase organizational efficiencies through better worker collaboration is paying off -- for our customers and for Optura. So my hats off to those of you who helped fill the year with pleasant reflections, and to those of you considering our process improvement solutions. In the upcoming year, we'll continue to provide customers with the ability to manage and control working capital, reduce costs, and improve process efficiency.
Enjoy this season as you reflect on the past and plan for the future.
Coleman Barney is the President and CEO of Optura. He can be reached at cbarney@optura.net.
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| Business Optimization Insider - Increasing Operational Cash Flow to Help Fuel Business Growth |
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What is Free Cash Flow and Why is it Important?
Free Cash Flow is money earned from operations that a business can actually put into its proverbial savings account after all is said and done. Free Cash Flow is cash from operations (also called operating cash flow) minus capital expenditures, which are investments in property, plant, and equipment.
Free Cash Flow is calculated by adding depreciation and amortization back to net income, subtracting the net change in working capital, and then subtracting capital expenditures. More simply, it is found by subtracting capital expenditures from cash flow from operations. Free Cash Flow is the cash available after operating activities to pay down debt, issue dividends, buy back stock, or invest.
The numbers needed to calculate Free Cash Flow reside on the cash flow statement. A company's cash flow statement is vitally important, so it's ironic that it's the statement least scrutinized by analysts on Wall Street. The cash flow statement gives investors a much clearer view of a company's cash generating (and keeping!) capabilities. And that's what's important.
How Optura's Vendor Invoice Management™ (VIM) Solution Impacts Free Cash Flow for Organizations
Optura's VIM solution for managing vendor invoices gives a company total control over the process of handling liabilities in accounts payable. Where does the impact show up? If you take a look at the Statement of Cash Flows and then go to the "Cash Flows from Operating Activities" and find "Changes in Operating Liabilities" or a similar heading, you'll find "Accounts Payable and Accrued Expenses." Here's where the impact is felt. Without the VIM solution, reporting on total liabilities is difficult, and proactively managing vendor payments is not easy to do.
As we've worked with many large high-volume accounts payable groups in a variety of organizations over the last 5+ years, we've seen a similar trend of inefficiency as it relates to handling non-PO invoices specifically. The problem lies in having invoices sitting out in the field waiting for account assignment and approval, while A/P has no record of the liability. Then one day the vendor calls and wonders where their payment is, that its late, and this is a pattern, so A/P springs into action to try and find the invoice. If the vendor is adamant about being paid immediately, many A/P groups will pay from a faxed copy and try and sort it out if and when the original invoice arrives from the field, hoping they don't create a duplicate payment.
One company recently estimated they had about $12 million unaccrued liabilities in the form of non-PO invoices out in the field, while another said they expected that about $10.5 million was sitting out in the field without any record of the liability. Meanwhile, when these invoices do get sent in to A/P, oftentimes it gets recorded after the budgeting period has been closed, and the liability was unexpected. In one instance a company paid invoices in February that were due in November, and the new year's budget had to absorb an unexpected $600,000 worth of purchases from last year.
The higher the percentage of non-PO invoices, the higher the risk that the company's actual financial position will be off, and the more inaccurate the Free Cash Flow number will be. It is not uncommon to see 50% or more non-PO invoices as a percentage of all invoices processed, and 90% or more of these invoices arrive on paper and get passed around from person to person until they hopefully land in A/P for payment in a reasonable period of time.
The VIM solution from Optura is a strategic enabler for this process. It allows a company to change the way they handle vendor invoices by receiving all non-PO and PO-based invoices in one location (central A/P processing center), create an electronic image (a separate tool we recommend), and manage the approval and payment of all invoices with complete control over the process. The reporting tools give a very accurate reading of all outstanding liabilities, regardless of whether the invoice has a problem that needs to be resolved or not, and allow management to expedite payments or hold payments depending on how they want to manage working capital.
With this functionality a company can now be proactive about strategically managing their Free Cash Flow, rather than having minimal control over liabilities and payments.
How Do I Learn More About How Optura's Vendor Invoice Management Solutions Can Improve My Free Cash Flow Situation?
Optura solutions personnel will be happy to help you understand how these same benefits can be realized by you and your organization. Please call us at 888.658.0990. We look forward to helping you unlock and improve your Free Cash Flow!
Doug Free is a senior Business Development at Optura. Please feel free to contact Doug at (dfree@optura.net) with your questions or comments.
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| Recent and Upcoming Events |
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Optura Continues to Demonstrate Industry Leadership - here are some events to take note of:
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