CFOs Find Working Capital Hiding in Every Payment

Chief financial officers (CFOs) are discovering new ways to optimize working capital within their organizations through the accounts payable (AP) function, according to Court Toomey, senior vice president and head of Commercial Payments and Product at Priority Commerce. Traditionally, AP has been viewed simply as a mechanism for paying suppliers on time, but its potential as a strategic lever for managing liquidity and supplier relationships is now gaining recognition.

With advancements in integrated payables, virtual cards, enhanced ERP data, artificial intelligence, and improved payment methods, finance teams are treating each payable as a decision point for optimizing liquidity, financing, and supplier management. CFOs are now analyzing the cost of payment options versus the working capital benefits they can achieve, considering when to pay early for discounts, when to wait to preserve liquidity, and when to leverage virtual cards for added benefits such as rebates and fraud controls.

The decision-making process has shifted from merely executing payments automatically to strategically allocating capital. As payment execution becomes automated, the focus shifts towards making informed decisions about when cash should leave the balance sheet based on liquidity needs, supplier economics, and available discounts.

This reframe transforms AP from a queue of liabilities into a portfolio of decisions, enabling companies to optimize cash positions at a more granular level, especially when trading with overseas suppliers.

In summary, the evolving capabilities of AP, driven by technology and data insights, are equipping CFOs with powerful tools to manage working capital more effectively, making payment methods a key component of overall financial strategy.