Call for change

When the COVID-19 pandemic set in and drastically impacted businesses and economies around the world, many companies were faced with concerns around the availability of cash and whether it could be deployed where needed. This monumental event put liquidity at the top of mind for every chief financial officer.

For Accenture, our Finance organization—already on the leading edge in managing cash—turned to stepping up our focus and getting a near-real-time view of cash coming in from receivables and cash going out for payables. This data now needed to be reported daily so that it could be analyzed and run through scenarios with recommendations on actions to Accenture leadership. This enhanced view of Accenture’s near-term cash flow allowed Accenture to better respond to client requests for changes in payment terms.

All these requirements pointed to the immediate need to accelerate the use of our analysis and reporting tools and solutions to provide a daily pulse on the status of Accenture’s client billings and collections. Finance needed to feed this information to Accenture’s senior leaders much more rapidly than ever in the past so that these leaders could act on it.

When tech meets human ingenuity

Accenture Finance rapidly assembled a COVID-19 Response team led by the Chief Accounting Officer and Corporate Controller. These teams were organized into four workstreams: Controllership; Treasury and Corporate Planning & Analysis; Financial Management; and Corporate Development. They used existing and new processes, governance and capabilities to get the insights they needed to address the liquidity challenges of Accenture clients as well as the company’s own needs, including the need to manage the follow-up of collecting payment from clients.

COVID-19 dashboard

One critical capability that was needed right away was real-time metrics on billings and collections. The COVID-19 Response team knew it could not wait for semi-monthly reporting as Accenture clients were facing their own liquidity concerns, requests were coming in each day and the markets were volatile. The Response team needed leading, not lagging indicators.

The Response team took the lead in building a COVID-19 dashboard in collaboration with Accenture’s global IT organization and other key functions. They used existing data and analytics to capture different categories of metrics, one of which was cash flow. This category provided cash flow metrics in the way of cash receipts, late balances, billing volume and accounts payable. The dashboard also included a range of cross-functional business metrics serving other functions.

The team developed this dashboard at speed due to Accenture having a single global SAP ERP instance, SAP S/4HANA, and a single data lake that includes data from SAP Treasury and Cash Management giving Accenture a comprehensive "single source of truth." Because those components run in the Microsoft Azure cloud, they provided the scalability needed with the performance that allowed complex queries to drive the dashboard. All combined, this technology provided the critical insights to Accenture’s cash flow at all times.

"Our ability to respond to rapidly changing market conditions brought on by COVID-19 was the result of the seamless interplay between our people and our technology."

— Onkar Liddar, Assistant Treasurer – Accenture

This COVID-19 dashboard provided Accenture leadership with daily and weekly updates, something that was never needed before. They gained the visibility they needed to address unprecedented situations and make rapid decisions. For Finance, the COVID-19 dashboard allowed leaders to make real-time decisions in ways that helped solve for clients and for Accenture.

Beyond the COVID-19 dashboard development, the Response team launched other activities by workstream in the following ways:

Controllership

Using the COVID-19 dashboard, the Controllership team was able to track daily how much cash was collected, how much cash was paid out in payables and what amount was billed. They were also able to compare this data to historical norms to determine whether Accenture might develop potential cash flow challenges. The team also used dynamic scenario-based forecasting models. Microsoft Power BI was used to visualize the data, making it easier for Finance to communicate and present data to Accenture leaders, incorporating insight and recommendations to drive actions where appropriate.

The impact of the pandemic on the economy led Controllership to place additional scrutiny on impairment to balance sheet items, internal controls and compliance. Controllership teams also assessed a variety of potential financial statement impacts including variable compensation models, examined tax impacts and examined potential uncollectible receivables.

"We had our fingers on the pulse of what was happening with our cash every day."

— Richard Clark, Chief Accounting Officer and Corporate Controller – Accenture

Treasury and corporate planning & analysis

The Treasury team was laser focused on Accenture’s global liquidity needs, making sure Accenture had sufficient access to cash, could estimate cash flow and articulate the cash position to senior leaders. Similarly, Treasury was instrumental in helping Accenture leaders understand the liquidity positions of Accenture’s clients to help mitigate risk and serve as advisors in discussions with clients.

Treasury, in collaboration with Accenture’s Consulting and Technology services and global IT organization, had in the past year developed a holistic "intelligent cash" capability made up of three assets:

Liquidity dashboard. The Liquidity dashboard provides near-real-time feed of Accenture’s cash balances across Accenture’s 400 operating entities. Using detailed visualizations, the dashboard enabled the team to quickly understand cash and credit by location and bank. The tool uses bank connections and statements to update tables in Accenture’s SAP S/4HANA system four times a day. Treasury users can drill down by currency, country, business entity and banking partner, as well as view the use of credit lines and the status of the accessibility of cash.

Predictive cash flow forecasting. Predictive forecasting helped to forecast Accenture’s cash needs. This capability is powered by sophisticated algorithms that adapt to the behavior of cash flow items, geographical differences and data volumes to generate forecasts by each country Accenture operates in. It automatically aggregates bank statements weekly to gather data on transactions, including collections and disbursements, which gets fed into a predictive cash forecast model. Treasury users get a forecast that is easily digestible, adjusted and validated by Finance people across Accenture.

Cash inventory optimizer. The Treasury team used this optimization model to review recommendations on whether to inject or extract cash based on the cash flow forecast and Accenture-specific economic factors. The model treats cash as inventory and optimizes it using an algorithm intended for that purpose as its engine. It optimizes transactions to objectively operate a "near-zero-balance cash balance" (on average) in every currency while considering factors such as the value of centralizing cash and the transaction costs.

Credit rating tool. Separately, the Treasury team quickly created a credit rating tool with several measures to assess the credit worthiness of Accenture clients, which in some cases was changing rapidly. The effort involved drawing from conventional data sources as well as getting input from news reports and other live sources on a continual basis that was maintained in real time. The Treasury team merged, analyzed and summarized the information weekly.

Finance used the information to assess the health of receivables from existing clients when Accenture was signing on new business to help manage risk. The information also helped inform the commercial response center of excellence teams and account teams in solving for clients and Accenture.

The Treasury team was able to quickly assess liquidity and provide Accenture’s senior leaders with real-time data on cash collection and the health of Accenture’s total liquidity. Accenture was able to avoid the stresses of a volatile environment because senior leaders had timely insights to help make decisions.

Financial management

Commercial response centers of excellence. The Financial Management workstream team, comprised of Finance professionals who support Accenture’s large client accounts, established three temporary commercial response centers of excellence, one for each of Accenture’s geographic markets. Their purpose was to provide a consistent approach to client discussions, including the capability to understand where changes in Accenture’s billings and collections were occurring, and where there were proposed demands, to quickly vet them.

The centers made use of the commercial, controllership, treasury, contract, pricing, quality and risk, legal and negotiation expertise across Finance and other corporate functions. This array of cross-functional response teams provided integrated support across all of Accenture’s commercial functions and drove best practice in the decisions market leadership was taking.

This cross-functional support helped guide client account teams in each market to handle possible commercial renegotiation of rates and payment terms, preparation of offers and facilitation of approvals of changes on existing contracts. Client requests were often discussed live, finance to finance, CFO to CFO, as decisions needed to be made quickly. Client finance personnel could best explain their positions and help Accenture Finance make informed decisions. The mindset was to solve for clients and for Accenture, iterating on solutions designed to meet both parties’ needs.

Weekly large account surveys. The Financial Management team surveyed the Finance teams supporting Accenture’s largest client accounts weekly regarding material in-quarter impacts to sales, revenue, pricing, cash and headcount. The teams also captured requests for new payment terms or reductions in run rate that would impact Accenture’s near-term cash flow. Other aspects were surveyed beyond cash flow, such as impacts to investment decisions and sales and revenue projections.

These requests were routed in real time to the commercial response centers of excellence. The Financial Management team set up a defined process of routing all requests from clients and vendors regarding changes in contract and extension of payment terms to this team.

"When you mobilize thousands of Finance people in short order, to take action in a volatile environment, communications that are short, crisp, clear, empathetic, and easy to follow are absolutely critical."

— Greg Geisler, Senior Managing Director – Business & Commercial Finance – Accenture

Fast recommendations. The commercial response teams were also responsible for quickly preparing recommendations on where to focus on client accounts in Accenture’s markets and market units. In many cases, the guidance was needed the next day. These teams received the requests from client account teams and provided feedback, either quickly approving a request or providing advice and commercial coaching on how to best structure alternatives. They also captured decisions and routed them back to the accounts.

By tracking requests and approvals with Microsoft Power BI, the Financial Management team could view in real time how much Accenture was investing and monitor it against agreed guidelines. Together, these individuals played an important role in providing ways to address clients’ needs with alternatives that worked for both clients and for Accenture.

Finance teams were also responsible for making sure Accenture was invoicing clients on time and collecting cash on time. At the same time, Finance was fully aware that not all invoices would be paid on time. To help project potential late payments, the Finance team used intelligent collection tools. These tools use payment behavior analytics to analyze changes in customer-specific payment performance. In real time, the team could see where Accenture was running into issues. That insight created an opportunity to engage with clients and have a conversation about solutions.

In addition, some of the options the response centers proposed had revenue recognition and P&L impacts that Controllership needed to review the implications of before making decisions. The Response team also tracked contract changes that were going to occur or potentially occur. This overall process centralized the change requests, providing Finance with a way to prioritize capital.

Corporate development

The Corporate Development team drives Accenture’s acquisitions activity from target identification and opportunity origination through to deal structuring negotiations and on into post-merger integration. When the pandemic started, Corporate Development leadership quickly mobilized to reassess all in-progress acquisitions, including their continued relevancy to Accenture’s overall strategy and rapidly revising financial due diligence of the targets, including deeper assessments of their financial health by the Accenture Treasury Due Diligence team.

Certain targets that were over-weighted to the more severely impacted industries were dropped, while new targets that best aligned with the quickly evolving post-pandemic market were identified and approached. In addition, some companies that Accenture had previously courted, but were not quite ready to sell at the time, returned to the negotiation table as their own growth prospects began to face headwinds.

Teaming and communications

Our newly implemented horizontal Finance model, teaming culture and assets, among other factors, helped our teams to quickly respond to the economic shock of COVID-19. The robustness and rigor of our existing governance (e.g., approvals and authorizations), industrialized through years of practice and familiar to many, were also beneficial.

We could not ignore the very real concerns around the health of our Finance professionals and those around them, along with the stresses of being in quarantine. We deferred or eliminated altogether other cyclical tasks, other transformational initiatives, to create the capacity, the space for our Finance people to solve for their own needs while they were solving for Accenture’s cash flow needs and those of our clients. It took collaboration, clear communications, easy-to-follow instructions, and reinforcement of rules and approval policies in a pandemic context.

A valuable difference

As COVID-19 continues to impact the world, liquidity for companies and government organizations is an ongoing concern. This unexpected and unprecedented event reveals the importance of investing in technologies, new capabilities and skills to nimbly respond to change in what could be the "never normal." It is also important to have the right leadership structure and governance mechanisms in place.

Accenture Finance was able to activate its activities at tremendous speed and deliver value. Value was delivered in the way of insights gleaned from the commercial response centers of excellence combined with timely data and analysis to Accenture Finance leaders as well as to Accenture’s CEO and top global leaders for critical decision making. This entire scope of information helped Accenture’s CFO to manage risk and communicate effectively regarding measures taken and their impact with banks, the investment community and other business stakeholders.

In addition, Accenture’s strong financial health enabled Corporate Development to continue to execute on the Accenture strategic priorities with 22 acquisitions closed in the first six months of the pandemic.

The company met both financial and operational goals, including virtually closing Q2 and Q3 on time and filing Accenture’s 10Q on time. And commercial finance—clients, payments, new work—was seamlessly managed.

While the more frequent, more real-time approach to reporting was stood up in response to the need of the uncertainty arising from COVID-19, it raised the bar in terms of expectations. Accenture Finance now anticipates continuing to report on some of the metrics more frequently than in the past because of the value it is providing to the business.

Accenture Finance liquidity management differentiators:

"In an unprecedented event like COVID-19, you can’t wait for your monthly results and look backward to figure out what to do. By then, too much has happened. You need near-real-time leading indicators so that you can make decisions in real time."

— KC McClure, Chief Financial Officer – Accenture

Speed to produce new metrics and reporting and to mobilize people

Ability to access and visualize data efficiently and effectively

Daily reporting on near-real-time billings and collection status company-wide

Analysis and strategic advice to the business

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