Jim Hunt: Oh, that sounds great. Well, let’s jump right in and talk about treasury and cash management. What does a health check in that area entail?

John Froelich: Sure, Jim, so, you know, in our space in the treasury, so one thing to note, I am also in addition to the VP of marketing strategy and everything else, I am the business area lead for our treasury business and it’s my goal and my job to help our clients and help our team take advantage of SAP – – and all it has to offer in quote unquote, treasury and cash management. And we’ve developed three specific health checks for that purpose, one focused on banking one focused on cash and one focused on traditional treasury things like derivatives and foreign exchange and hedging. And today, you know, obviously we’re talking about the cash management one and the idea of cash management is really to help you understand how are you doing with managing your cash? You know, do you understand where your cash is?

John Froelich: Do you have visibility into it? What is that visibility? Is it a real-time visibility? Is it the day before? Do you have visibility into all of it? It’s about understanding your cash position and cash position being, things like: do I have excess cash and can I invest that in the marketplace to get a return? Nobody likes to sit and have tens of millions of dollars cash sitting around doing nothing or do I have some big bills coming up and I need to do some short-term borrowing in the marketplace. And so we look at that, we look at the ways in which you connect the dots between your accounts receivable and your accounts payable, so that you have a complete visibility of your cash. One of the tools and the ideas that people use is this idea of in-house cash. Think of it as in-house banking, where you loan or create pools of money and you can loan that money out or use that money on behalf of other groups, netting pooling, ROBO, POBO are all parts of that. So we take a look at your entire cash management ecosystem, including your banks, your payables, everything, and try to give you a real sense of how can you free up trapped cash? How can you do other areas, other things that will benefit you.

Jim Hunt: And, and just to define: for most of our audience probably knows about ROBO and POBO, but those are receipts on behalf of others and payments on behalf of others.

John Froelich: That is absolutely correct, Jim, so in a lot of countries or in a lot of companies, what they do is they pool together and they’ll have a headquarters organization, that manages all the receivables on behalf of another organization. Sometimes, and one of the trends that we’re seeing in the industry is either the receivables departments or the payables departments, they’re creating these ideas of shared services or centers of excellence, and they offshore it, or they nearshore, it, it doesn’t really matter, but they create centers of excellence or hared service organizations, global shared service organizations that either collect cash, look at the receivables and then put them into the bank for these different organizations, or when we think of POBO payable pay on behalf of all your bills go to one place and they pay on behalf of, and of course the benefits of that are, let’s take an example of, I have 30 different organizations using something as simple as UPS for shipping, right. If I can bring all of that together into one space, I can get bigger benefits on, you know, paying larger bills and having a volume business, etc. So that’s really what that’s all intended to do.

Jim Hunt: And actually that leads nicely to the next set of questions too, because what you described as really a multi-faceted global cash management operation. So, if a company is embarking on a health check, who from the client company needs to be involved in the process?

John Froelich: Yeah. And, and we, you know, we talk about these as being treasury health checks or revenue accounting, or leasing in those cases, but really they’re health checks of an ecosystem. And when we talk about an ecosystem, it’s very much the same as any of us who learned biology, where it’s the entire system, it’s the ecosystem for example in a pond, right? You have lots of different things that relate to the pond, the runoff and all of the animals and creatures. Same is true, of course, for treasury and in cash management. It’s not simply the treasury team who obviously needs to be involved in this because they’re the ones who manage the inflows and outflows of the actual cash and have the banking relationships. But the accounts receivable and accounts payable departments need to be involved. So the controller’s organization, because they’re the ones who, who are making decisions about where the money goes, cash disbursements, or they’re making decisions about my payable terms.

John Froelich: And so they’d be involved in that. Vendor management teams in the case of accounts payable might be involved in this because you’re looking at your, maybe your days payable, outstanding. And you’re looking at your terms to rationalize or unify that together, clearly your IT team, right? You want them involved because you want to create an infrastructure that’s integrated and takes advantage of the best practices and can optimize your opportunity to do what we call straight through processing, right. And straight through processing is, you know, literally receiving a bill, acknowledging the bill, paying that bill and acknowledging that payment through the banks all without a human being ever touching it. Or maybe it’s touched in a way but it’s only through an acknowledgement. So, you know, lots of different organizations, let’s recap, your treasury organization, who owns the disbursements, owns the banking relationships, your finance organization under the controller who manages the accounts receivable accounts payable. You might have some operations people who are involved in some of those processes, as well as your IT team. And then of course, and finally, anybody who does all of your recording and reporting all should be probably involved in this process.

Jim Hunt: So you brought the team together, what are the key steps in the process, and also how long does it take overall?

John Froelich: Typically, it’s a, it’s a three-step process Jim. And that’s a great question. The first step in the process is you know, we all begin with as Stephen Covey said, you begin with the end in mind. And what we do is we sit with our clients and try to understand and work out what is it that you want to accomplish through this health check? What would you like to see? And it’s a guided discussion in which we help the customer understand where do they want to go? What are the opportunities and we talk about the focus areas that they might have in mind, right. It might be that they’re doing fine with their cash disbursements, but maybe they’re having some issues and challenges on receivables or GR/IR netting or something like that. So, you know, we focus in, so that’s step one to define the specific purpose and outcomes they want.

John Froelich: The next piece is that we create a set of or drive a set of workshops and those workshops revolve around four basic dimensions. Those are your functional dimension and defining what functions do you use? What tools do you use? What do you do in your organization, for example, do you do netting and pooling? Do you do sweeps? Are you a company that is doing ROBO and POBO. Or how do you manage your cash position and cash visibility? Are those things that you do today? Right. The second piece would be given that those functional things exist, how are you doing them operationally? How are you doing that? Are you using spreadsheets? Do you have a third party tool that might be doing some of your AR management? Are you having a third-party tool that might do some other things?

John Froelich: Do you use banking portals instead of, you know, a tool like a multi-bank conductivity from SAP? And so we look at it from that perspective, what are you doing? How are you doing that operationally? Then we look at your technical infrastructure. Are you challenged with some of the issues? How are you managing? And what’s the latest SAP you have. We look at that dimension, we look at integrations. Are you having issues and challenges with integrating third-party solutions like many people do, how much time are you spending on reconciliations as a result of that? And we look at that whole aspect of it and make recommendations on that. And finally, you know, at the end of the day, analytics and reporting are the crucial element in your ability to really make decisions and take that to, as we used to say the insight to action, right?

John Froelich: You need the data to tell you the insights so that you can take the actions to transform your business. And so we look at all four of those dimensions, we work and put workshops together. Each of them is about an hour and a half to two hours. And then in step three, we bring all of that together based on our experts. And many of our people have 20 plus years of experience both in industry, as well as in SAP. And we prepare a report with detailed recommendations on what you can do both low hanging fruit, as well as a long-term roadmap. And so we bring all of these together to give you a really great assessment of where you are today, where you want to go and kind of a very high-level roadmap, if you will, or general roadmap on how to get there for the future.

Jim Hunt: That’s great. So in that whole process, what sort of RO can companies expect to get from going through a health check process like you just described?

John Froelich: You know, Jim, it’s funny. So what’s the ROI on the health check? Well, we don’t charge a lot for the health check on average, we charge you know, $20,000 to $30,000 for the health check. So companies can expect to receive a significant ROI on the health check itself. For example, one of our client companies just by implementing SAP MBC was able to get a huge return on investment in their overnight cash and save hundreds of thousands of dollars every month on the borrowing that they were doing. Other customers have identified opportunities to improve processes in their organization and identify how they’re integrating their CRM tools into SAP to provide straight through processing and are saving, you know, maybe a half a man year in that kind of activity where they were doing a lot of reconciliations. It’s hard to nail down. Every company is different. Every company has something unique to it. And so we have to kind of gauge it that way,

Jim Hunt: But overall it’s relatively small investment for what you get from the front end. And then as you go through implementation, that can be a huge payback.

John Froelich: Yes. And it’s a, it’s a very small, relatively small investment. I mean again, $20,000 to $30,000. It’s a small investment for a report. And our reports typically range in length from 25 to 40 pages long and are very specific in terms of our recommendations. We’re currently working with one company where we’ve been able to identify over 45 different opportunities for them to improve their business including making real time short-term investments that can improve their ability to do project accounting and reduce significantly the amount of time they spend on recasting re-forecasting and reconciling data from their projects.

Jim Hunt: So if I am a leader of a company listening to this and I’m intrigued and want to get started on a health check, what do I need to do to prepare? And then how do I actually engage and get started? Okay.

John Froelich: Okay. So, you know, the first thing is just by engaging and thinking about doing a health check, you’ve done the first step by acknowledging that you might be able to do better, and that there might be an opportunity for that is what you need to pre prepare for. The second thing I would do is appoint somebody, who’s your focal point, your, your point person, and have them take this on. Where we’ve seen the best results is where there’s a key person, either in the IT or the business organization. And they’re the focal point, but at the same time, you need the buy-in from both the IT and the business team. So make sure that your treasury and controllership both are bought into this process, because if they don’t participate, you’re not going to get the win. The next step is pretty easy: reach out to us. We have some really great little quizzes that you can take on the website. So go to www.bramasol.com and check out that on our health checks or reach out to me. My email is [email protected] and we’ll be happy to get you set up.

Jim Hunt: We’ll make sure we post your contact info in the transcript section of the podcast when it publishes. Any final thoughts, John? This has been great.

John Froelich: You know, Jim, my final thought is you know, a health check is a great way to understand where you are and where you want to go. It’s a low investment opportunity. And even for companies that may not decide to embark on large projects, the dialogue that’s created and the understanding that’s created across your organization are more than valuable enough to you to engage in this process. It’s simple, it’s easy. It’s information from experts who’ve been doing this for 20 plus years. I strongly recommend you check it out, talk to us and we’d love to engage with you.

Jim Hunt: That’s excellent. Thank you, John, for your time today. I know the listeners will really appreciate what they’ve learned. Thanks and bye-bye

John Froelich: Well, Jim, thank you very much. You make it a great day, as we say, and happy new year to everybody.