More than 25 Percent of Fortune 1000 Companies’ Hiring Capabilities May Suffer Due to Delayed Cash Flow

Location: New York
Author: Jill Wilmot
Date: Friday, December 16, 2011

Capgemini yesterday released the findings of its most recent Executive Insight Survey that found Fortune 1000 companies are feeling the pressures of late payments on their bottom line. The top three areas affected by delayed cash flow, as cited by the surveyed executives, include growth (29 percent), hiring (27 percent) and revenue (20 percent).
“In this market, the need to stimulate cash flow is critically important to companies looking to remain competitive and sustain a strong workforce.”
The survey, commissioned by Capgemini and conducted online in September 2011 by Harris Interactive, polled 304 executives from Fortune 1000 companies and found that nearly half (45 percent) have seen an increase in late payments from their clients. Fifteen percent of executives noted a major increase (a jump of 25 percent or more) in late payments within the past year. Nearly a quarter of those affected by payment delays said that this trend has had a significant impact on their business.
Some companies may adopt tactics to mitigate the impact of late payments from their customers, including outsourcing cash collections. Of those companies that currently outsource the collections function, more than half said it reduced bad debt loss. In addition, companies noted an increase in profitability (34 percent) and increased efficiency on all points of the revenue cycle (32 percent).
“The survey shows a worrying trend, as many top firms are being impacted by an increase in late payments. Our experience in working with some of the world’s largest companies has shown that those organizations that outsource their accounts receivables processes to third-party specialists may significantly reduce their bad debt losses,” said Chris Stancombe, Head of Finance and Accounting Outsourcing at Capgemini. “In this market, the need to stimulate cash flow is critically important to companies looking to remain competitive and sustain a strong workforce.”
The survey highlighted other areas affected by delayed cash flow, including the ability to offer wage increases, support innovation and invest in research and development.
Capgemini’s Business Process Outsourcing (BPO) unit works with clients to help their Order-to-Cash function efficiently generate profitability and increase cash flow. Capgemini has recently enhanced its credit management and collections outsourcing service with the acquisition of the Order-to-Cash business of leading specialist provider, Vengroff, Williams & Associates, Inc. Capgemini realizes over $39 billion in account receivables collection value annually for its clients.
For more information and to download a summary of Capgemini’s survey results, please visit http://www.us.capgemini.com/OTCinsightsurvey/.

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