We start by reviewing the current process which shows the gap between amount collected and payment in current process. As a collection, we found the lack of using the legal action on overdue invoices. On the other hand, payment have the below issues; • Delay on receiving the invoices from supplier as well from the user department. • Inactivate for AP aging on the system due to delay of receiving the invoices. • High request for the advanced payment for non-contractor supplier. • Lack of coordination with procurement for the actual payment required on monthly basis. • One of the best solutions is to used capital metrics from the balance sheet such as DSO (days sales outstanding) and DPO (days payables outstanding). As a result of the current situation we get difficulties on covering the operation expense furthermore, lacking on managing the cash. As a solution for the issues and to improve the cash management we start by coordinate inflow with outflow. Which mean we make sure that the cash goes out is necessarily come in at the required. To do so we Change the cash management culture by actively track the cash flows and enhances the process. we are focusing on below improvement for both collection and payment; • Start using the legal steps on collection specially for the bankruptcy company. • Coordinating with GACA to stop reissuing the licenses for missed payments company. • Activate the AP aging. • Stopping the immediate and advanced payment to supplier. • Coordinating with procurement and all other department to get assumption of payment required twice a month. • Using the DSO and DPO to enhance the accuracy of the forecasting. • Coordinating with supplier to get the discount in case of early payment. by using the enhancement on the process, we will get the positive impact for the business as below; • Controlling the cash out based on the cash in from receivable. • Reducing the outstanding payment for the supplier. • Controlling advance payment. • Collecting the full data of estimated amount for monthly payment. • Getting the full benefit of remining balances by having the option of investing or cash deposit. Action: To get the benefit of the above initiative we need the below approval; • Any advanced payment less than 50k will require the CFO approval, and for above that will be required CEO approval, excluding if the down payment mention in the contract. • Approval to reject and return any invoice received in Finance department after 5 working days from the date of issuing the invoice to change the date so we can start using the AP ageing.
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