Strengthening cash flow management and liquidity: A Finance–Procurement alignment approach — Executive Summary

This article serves as the executive summary of a six-part series built for finance and procurement leaders aiming to strengthen their organization’s cash flow management and liquidity position.

The series follows the methodology described in our ‘Aligning Finance and Procurement’ in-depth guide, which offers a practical, structured approach to enhancing cash flow visibility, optimizing payment timing, reducing working capital risk and improving liquidity outcomes through closer collaboration between finance and procurement.

Each week, we’ll explore one of five foundational phases that help organizations break down silos, align priorities and build the operational and technological capabilities needed to manage cash more effectively.

Cash flow management is no longer an isolated finance function, it requires end-to-end coordination across teams and systems. Yet, many organizations continue to face:

• Disconnected invoice approval workflows and delayed supplier payments
• Missed early-payment discount opportunities and unpredictable cash outflows
• Fragmented systems that block real-time visibility into obligations and forecasts
• Conflicting KPIs that reduce collaboration and erode working capital performance

These inefficiencies directly impact cash conversion cycles, liquidity buffers and the ability to respond to market volatility. Through this series, we’ll explore how organizations can overcome these challenges by strengthening finance-procurement collaboration — ultimately improving financial predictability, supplier stability and overall cash flow performance.

A glimpse into the five phases

Phase 1: Understanding the Foundations

Establishing a shared understanding of cash flow priorities is essential before meaningful collaboration can occur. Finance typically focuses on optimizing Days Payable Outstanding (DPO), cash flow predictability and cost of capital. Procurement, meanwhile, works to strengthen supplier relationships, capture discounts and reduce total procurement costs.

This phase explains:

• How these differing priorities affect liquidity planning and supplier risk
• Where alignment on payment terms, budgeting and forecasting can unlock working capital value
• Why integrating supplier cost insights into financial planning improves predictability

Phase 2: Identifying Common Misalignments

Organizations often fail to see the specific points where siloed operations hurt cash flow. This phase highlights five common areas of breakdown and their cash-related consequences.

Key misalignment areas include:

• Delays from disconnected approval workflows and P2P inefficiencies
• KPI conflicts, such as finance’s DPO targets clashing with procurement’s relationship goals
• Lack of cash flow visibility due to siloed supplier and spend data
• Fragmented payment strategies across categories or supplier tiers
• Financial reporting gaps caused by limited procurement integration

These challenges limit organizations’ ability to predict, manage and optimize cash flows, and create unnecessary exposure to penalties, missed savings and liquidity shortfalls.

Phase 3: Structuring the Collaboration

Misalignment isn’t resolved with good intent alone. Organizations need a structured, intentional approach to design and sustain collaboration between finance and procurement.

This phase focuses on:

• The importance of early procurement involvement in budgeting and forecasting cycles
• How conflicting KPIs around cash flow and cost must be resolved through shared metrics
• Building cash flow awareness into approval workflows, contract negotiations and supplier segmentation
• The financial consequences of delayed invoice approvals and inconsistent payment practices
• How to develop a roadmap for integrating payment strategy into broader working capital objectives

Ultimately, this phase helps organizations move from reactive coordination to proactive cash strategy execution, where payment terms, supplier engagement and cash planning are jointly owned.

Phase 4: Leveraging Technology for Enhancement

Finance and procurement alignment cannot scale without the right technology. This phase outlines how organizations can deploy digital solutions to improve visibility, forecasting and cash control.

Key focus areas include:

• Integrated P2P platforms that enable real-time invoice status tracking and workflow automation
• AI-driven invoice processing to reduce errors, accelerate approvals and detect fraud
• Dynamic discounting and supply chain finance solutions to extend liquidity while supporting supplier health
• Predictive cash forecasting tools that combine procurement and finance data for scenario modeling
• Selection criteria for evaluating vendors that support cash-centric collaboration

Figure 1 provides a comparative view of leading solution providers in the cash flow and liquidity space, highlighting how they perform in terms of capabilities and customer-driven business value.

Figure 1

For more information on this benchmark and to explore additional insights check out our latest Spend Matters SolutionMap Release – Spring 2025

Phase 5: Sustaining Success with Shared KPIs

Long-term success depends on measurement. This phase explores how finance and procurement can build joint accountability around cash outcomes through shared KPIs and structured performance reviews.

Topics include:

• Tracking early-payment discount utilization and payment accuracy
• Balancing DPO improvements with supplier performance and satisfaction
• Using the Cash Conversion Cycle (CCC) to measure working capital gains
• Designing executive dashboards that tie procurement savings to liquidity improvements
• Setting review cadences that align operational results with financial strategy

Organizations that establish joint accountability improve forecasting, reduce risk and gain buy-in for ongoing initiatives.

Why alignment matters

Each phase in this series addresses a common, but solvable, challenge in cash flow management. When finance and procurement align through shared priorities, systems and performance metrics, organizations gain:

• More accurate cash forecasting
• Faster invoice cycles and fewer payment exceptions
• Better utilization of early-payment programs
• Stronger supplier relationships that support resilience
• Improved working capital and liquidity positioning

This series offers a step-by-step playbook to help teams take action and drive measurable improvements.

Final comment

Achieving seamless alignment between finance and procurement is no longer a luxury, it is a necessity for organizations aiming to optimize cash flow, improve liquidity and drive financial resilience. As explored throughout this series, cash flow inefficiencies often stem from misaligned priorities, disconnected processes and inadequate technology integration. However, by implementing a structured framework, leveraging digital tools and defining shared KPIs, businesses can transform finance-procurement collaboration into a strategic asset.

The journey toward better cash flow management requires continuous effort. Organizations must proactively address misalignments, invest in real-time financial visibility and refine procurement strategies to balance cost savings with supplier stability. Technology plays a pivotal role in streamlining operations, enabling predictive insights and automating key financial workflows to eliminate inefficiencies. However, tools alone are not enough. Success hinges on a cultural shift where finance and procurement operate as interconnected partners, jointly driving financial sustainability.

Ultimately, cash flow optimization is not just about managing working capital.It is about fostering agility, ensuring financial predictability and positioning the organization for long-term growth. By embedding collaboration, technology and performance measurement into core financial strategies, businesses can unlock new efficiencies, mitigate risks and build a more resilient financial future.

Next up

More in this series:

Phase 1 – Understanding the Foundations: Aligning Finance and Procurement for Cash Flow Optimization