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Optimizing Back Office Operations: Best Practices to Maximize Profitability



Optimizing Back Office Operations: Best Practices to Maximize Profitability

Zahid Khalid

ISBN: 978-0-470-53189-1 March 2010 224 Pages


According to industry experts, a typical one billion dollar company spends approximately $27 million on unnecessary working capital and inefficient processing functions because they lack visibility into the financial supply chain. Optimizing Back Office Operations: Best Practices to Maximize Profitability uses examples and case studies to show how cost optimization—and not cost reduction—in the core back office operations is the right approach to maximizing profitability and enterprise value. Implementation guidance is provided for Executives, CFOs, and Controllers on transitioning from outdated processes to a fully-optimized financial supply chain.

Preface ix

CHAPTER 1 Profits: The Reason a Business Exists 1

Profitability Defined 2

Profitability Equation and Related Metrics 9

Liquidity, Growth, and Financial Flexibility 19

Conclusion 25

CHAPTER 2 Cost and Capability: Strategic Choices 27

Capability: One Size Does Not Fit All 28

Cost: You Get What You Pay For 34

Measuring Capability 41

Conclusion 44

CHAPTER 3 Financial Supply Chain: Entering the Gold Mine 45

What Is the Financial Supply Chain? 45

Working Capital Defined 50

Working Capital Processes 59

Conclusion 65

CHAPTER 4 Platform for Execution: A System for Maximizing Profits 69

Process Benchmarking 74

Process Optimization 86

Process Automation 86

Process Integration 88

Process Standardization 89

Conclusion 92

CHAPTER 5 Optimizing Accounts Payable 95

Implications of A/P Effectiveness 97

Best Practices 99

Enabling Technologies 115

Conclusion 122

CHAPTER 6 Optimizing Accounts Receivable 125

Implications of A/R Effectiveness 126

Best Practices 130

Enabling Technologies 137

Conclusion 144

CHAPTER 7 Optimizing Purchasing 147

Implications of Purchasing Effectiveness 149

Best Practices 152

Enabling Technologies 160

Conclusion 168

CHAPTER 8 Optimizing Treasury Operations 171

Implications of Treasury Effectiveness 175

Best Practices 179

Enabling Technologies 193

Conclusion 200

Epilogue 203

Index 207