DSO News published a new article about the concept of financial supply chain management which has become really popular these days. The author brings out a really nice question regarding this concept: Can the concept of Financial Supply Chain Management reduce the amount of cash corporations need to hold? Is the parallel with ERP useful?

In order to answer this question, the writer then explains some of the current issues in SCM which proves the importance of Financial supply chain management:

There are two facets of the comparison that are particularly pertinent. First, there is no doubt that one of the keys to successful cash management is accurate information on what the future outgoing cash requirements will be and of incoming cash. Second, the enabling technology base is now in place. In the last three years, the Internet has become a truly cost effective solution for interorganization communications and a trusted infrastructure for business processes, secure enough to carry forward the technical advances being made in e-payment systems.

The heavy investment in e-procurement in recent years has not fed through into automation of the payment process and there remains currently a lack of progress in the automation of payment systems. Problems include:

- Fragmented point solutions with very limited integration
- Limited interorganizational integration and automation
- Manual processes of dispute resolution, reconciliation and payments

But the biggest impediment most solutions fail to address is that 80 percent of the processes today are still paper driven. So automation solutions have to start by:

- Digitizing paper where possible so paper intensive processes do not slow down the processes, and
- Doing so without getting bogged down in complexity of business process re-engineering.

To address the needs of the marketplace, the fragmented point solutions available today must address both these weaknesses and re-invent themselves.