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The margin you borrow · The Leading Edge

• 0:03
  SPEAKER_02: Hello and welcome to the Leading Edge, a series which offers in-depth insights into the key challenges and innovations and evolving dynamics of the contract and commerce landscape.
• 0:14
  SPEAKER_02: I am your guest host, Izzy Drinkle, Director of Strategic Alliances for the Americas and EMIA at World Commerce and Contracting coming to you live from Envision in Austin, Texas.
• 0:25
  SPEAKER_02: In today's episode, The Margin You Borrowed, we're exploring a tricky question.
• 0:31
  SPEAKER_02: When does a saving stop being a saving and start becoming a cost that the business has simply pushed into the future?
• 0:39
  SPEAKER_02: The pressure to reduce input costs can create a particularly treacherous form of margin improvement.
• 0:46
  SPEAKER_02: A cheaper component, a tougher supply negotiation, or a reworked specification can deliver an immediate benefit to the PL while quietly transferring the cost into quality, resilience, customer relationships, or future revenue.
• 1:03
  SPEAKER_02: The challenge is that these two sides of the transaction are rarely connected.
• 1:09
  SPEAKER_02: The sourcing decision may sit in one system, the customer commitment in another, and the consequence may only appear quarters later as a warranty claim, lost renewal, or supply disruption.
• 1:23
  SPEAKER_02: The margin gain is visible, the liability is not.
• 1:28
  SPEAKER_02: So, how should we think about the difference between earned margin and borrowed margin?
• 1:33
  SPEAKER_02: What would it take to connect decisions on the cost side with a customer and contractual commitments they ultimately affect?
• 1:40
  SPEAKER_02: And can better use of commercial data give finance the visibility it needs to understand the true economics of cost reduction?
• 1:49
  SPEAKER_02: We're excited because this episode is the third in a four-part series called A Letter to the CFO.
• 1:55
  SPEAKER_02: We have created with in collaboration with Malbec.
• 1:59
  SPEAKER_02: The first part on the neglected asset shows why the contract's portfolio is finance's richest signal of both value and exposure and how to make it visible.
• 2:10
  SPEAKER_02: The second part was written against Deloitte's European CFO survey in spring 2026.
• 2:16
  SPEAKER_02: Shows why squeezing suppliers fails to recover margin, weakens the resilience you need, and makes supply disruption more likely.
• 2:25
  SPEAKER_02: So if you missed those, we can make sure you head to the CCM Institute website to catch up.
• 2:32
  SPEAKER_02: The third part is the base of our conversation today, and I'm very lucky to be joined by two experts, Sally Geyer, CEO of World Commerce and Contracting, and Hemath Putaswamy, CEO and co-founder of Malbec, who will guide us through this evolving landscape.
• 2:48
  SPEAKER_02: So welcome to the leading edge.
• 2:50
  SPEAKER_02: Before we um start, Sally, can you give us a recap on why we wrote this letter to the CFO?
• 2:58
  SPEAKER_03: Why is the letter to the CFO so important?
• 3:01
  SPEAKER_03: Absolutely, Izzy.
• 3:02
  SPEAKER_03: And thank you for that um wonderful introduction and setting the scene for us.
• 3:07
  SPEAKER_03: We have talked for the longest time at Worldcc about the fact that contracts are first and foremost economic instruments.
• 3:18
  SPEAKER_03: You enter into a contract ultimately for financial benefit.
• 3:23
  SPEAKER_03: I invite anybody to challenge me on any contract that you would enter into, even a non-disclosure agreement, ultimately has a form of financial benefit attached to it.
• 3:37
  SPEAKER_03: Your employment agreements.
• 3:39
  SPEAKER_03: The list goes on.
• 3:40
  SPEAKER_03: So what we've seen though over time is that the dominance of legal risk has taken over.
• 3:51
  SPEAKER_03: So we see contracts in a very different way.
• 3:55
  SPEAKER_03: And as a result, the CFO has perhaps, well, arguably, lost interest in the purpose of contracts.
• 4:04
  SPEAKER_03: So this letter to the CFO in all its facets is so important to us because we really feel that it's so important to reclaim that basis of being an economic instrument.
• 4:18
  SPEAKER_02: Thank you, Sile.
• 4:19
  SPEAKER_02: That's so helpful.
• 4:20
  SPEAKER_02: Herman, if I may start with you, let's start with the idea at the heart of this article, borrowed margin.
• 4:27
  SPEAKER_02: If a business cuts a cost today, but creates a quality, a customer or supply chain problem that only shows up 12 months later, is that really a margin improvement at all?
• 4:40
  SPEAKER_02: And why is it so difficult for organizations in finance in particular to distinguish between the two?
• 4:47
  SPEAKER_02: If I may start with you.
• 4:49
  SPEAKER_00: So thank you so much.
• 4:51
  SPEAKER_00: And uh very excited about uh the letter to the CFO series, uh, which is very relevant and very important in today's world.
• 5:02
  SPEAKER_00: So, talking about the margins, you know, like uh the CFOs are used to looking at the spreadsheets and the numbers, the PL uh statements, and looking at, okay, line by line item, okay, which one is going up, which one is going down, looking at the trends and so on.
• 5:20
  SPEAKER_00: But what they miss is the context, the context that is sitting.
• 5:25
  SPEAKER_00: So you don't typically uh do uh contracts with one supplier, you do it with hundreds of suppliers.
• 5:34
  SPEAKER_00: And also the natural reaction for the businesses to get the margins right, beat up the supplier to go hit the numbers.
• 5:45
  SPEAKER_00: But in reality, as you said, after 12 months, you're gonna see that, or maybe six months, or maybe eighteen months, and the supply chain is continuously changing.
• 5:57
  SPEAKER_00: So, in other words, the contextualization is extremely critical, right?
• 6:03
  SPEAKER_00: If if they if they look at, okay, the number on the cocks, like cost of goods sold, that's one part of the equation.
• 6:13
  SPEAKER_00: There are a thousand parameters feeding that.
• 6:16
  SPEAKER_00: So ability to see that in context across all the contracts is something that CFO is completely missing, and also that will help them not just uh increase the margins and also reduce the risk vector.
• 6:30
  SPEAKER_00: So there is a risk factor and there is uh uh the the margins.
• 6:36
  SPEAKER_00: Those can go against each other.
• 6:38
  SPEAKER_00: You need to balance it.
• 6:39
  SPEAKER_00: You need to be able to see, compare it, benchmark it within the repository, and make sure that you're taking the right risk to make sure you get the right margins.
• 6:49
  SPEAKER_01: Thank you, Yamav.
• 6:50
  SPEAKER_01: Sally.
• 6:53
  SPEAKER_03: It's so important for us to try and sort of contextualize this in the context of the contract portfolio.
• 7:02
  SPEAKER_03: We enter into contracts with customers, we enter into contracts with suppliers.
• 7:06
  SPEAKER_03: Uh, too often all of that data is sort of massively fragmented.
• 7:11
  SPEAKER_03: We're not connecting the dots between them all.
• 7:14
  SPEAKER_03: And yes, what we see is um suppliers looking at how they can cut corners because they're being squeezed.
• 7:26
  SPEAKER_03: Um, there they might change the spec in order to increase their margins, for example, so the customer ends up with a poorer quality product.
• 7:37
  SPEAKER_03: Uh, for a couple of quarters, that looks like better margins until the customer turns around and says, Oh, hang on just a second, we're not getting what we thought we were getting.
• 7:51
  SPEAKER_03: Uh actually, let's have a look at our warranties.
• 7:55
  SPEAKER_03: Um, we're coming up for renewal.
• 7:57
  SPEAKER_03: Do I think I want to renew now?
• 8:00
  SPEAKER_03: Not so sure.
• 8:01
  SPEAKER_03: So, what landed, first of all, as an improvement in margin suddenly ends up being a cost to the business that wasn't visible to the CFO.
• 8:15
  SPEAKER_03: And that it's that lack of visibility.
• 8:18
  SPEAKER_03: And talk about lack of contract visibility means lack of budget predictability.
• 8:25
  SPEAKER_03: And that's a problem for organizations that they're not addressing today in the way they they could and should be through visibility, through data visibility, through connecting all of those fragmented data pieces.
• 8:40
  SPEAKER_03: I talk about data puddles around the organization that are just disconnected.
• 8:45
  SPEAKER_03: So that's what happens in reality, but nobody's really understanding that that is um that is what's happening, and that there is an opportunity to do something about it.
• 8:57
  SPEAKER_02: Thank you.
• 8:58
  SPEAKER_02: Sally, the article talks about skinflation, reducing the quality or specification of what you buy in order to protect margin, often without the customer immediately knowing.
• 9:10
  SPEAKER_02: Um is this becoming an unintended consequence of the pressure businesses are under to find savings?
• 9:18
  SPEAKER_03: Yeah, absolutely.
• 9:19
  SPEAKER_03: I mean, it it is very understandable.
• 9:23
  SPEAKER_03: And the problem that we have today, I mean, look at the world around us.
• 9:28
  SPEAKER_03: Um, you've been talking, Hermanth, about um CPI, for example.
• 9:34
  SPEAKER_03: Let's look at the price of fuel and the impact that that's having around the world.
• 9:40
  SPEAKER_03: Geopolitics is dramatically impacting our trading relationships today.
• 9:47
  SPEAKER_03: And we're looking at every way we can to protect our businesses.
• 9:54
  SPEAKER_03: But unfortunately, the sort of the reflex action for many organizations is let's squeeze the supplier on price.
• 10:03
  SPEAKER_03: Um, let's look at how we can cut corners and deliver a less secure product, if you like, um and and still achieve the same revenue, the same margin.
• 10:20
  SPEAKER_03: But all of those ultimately are going to have impact consequences, as we've just talked about.
• 10:27
  SPEAKER_03: So the opportunity that exists today is to start uncovering the data, and frankly, Hemath, starting to have honest conversations between customer and supplier about the reality.
• 10:41
  SPEAKER_03: Starting to share data, that data transparency piece, you know, once you've got hold of the data, we can start being transparent.
• 10:48
  SPEAKER_03: But pulling these reflex levers is ultimately going to have negative consequences down the line.
• 10:57
  SPEAKER_01: Yeah, absolutely.
• 10:58
  SPEAKER_01: Herman, may I ask you your opinion on this?
• 11:02
  SPEAKER_00: So uh absolutely, I completely agree with uh what Sally said.
• 11:08
  SPEAKER_00: One of the other things that I would like to add to what Sally said is now customers are going to get more sophisticated.
• 11:16
  SPEAKER_00: Uh how uh now you have put in a lot of performance standards, the breakage fee, and apart from the renewal, they may come in uh say the old delivery of uh something, you know, like if it's a goods, it's it's damaged.
• 11:36
  SPEAKER_00: Uh uh you have to uh, you know, like you will pay the uh the consequence six months later.
• 11:43
  SPEAKER_00: And not just that, they will be able to, if they are having the sophisticated system, then they will be able to look at, okay, specific warranties, specific uh performance standards that the product is supposed to meet, and they will be able to point exactly which particular provision and use that as an option to cancel or uh reduce the fee or refund.
• 12:06
  SPEAKER_00: So the money that is going to impact the decisions, short-term gains will lead to a lot of long-term pains.
• 12:14
  SPEAKER_00: So they they need to look at it again as the whole thing together.
• 12:19
  SPEAKER_00: What they're squeezing, you know, like they're squeezing the suppliers or squeezing the customers, that honest conversation, making sure the supply chain is changing and the CPI is changing, and many other factors are changing.
• 12:34
  SPEAKER_00: So we want to make sure that we serve you better.
• 12:36
  SPEAKER_00: So for that, they need to have that honest conversation.
• 12:39
  SPEAKER_00: For that, they need the data.
• 12:40
  SPEAKER_00: And the data has to be contextual.
• 12:42
  SPEAKER_03: And I think it's really interesting what you just said, because it indeed customers are going to become they are becoming, not going to, they are becoming more demanding.
• 12:52
  SPEAKER_03: And equally, what we also see is greater supplier sophistication.
• 12:59
  SPEAKER_03: Many suppliers now have greater visibility into a customer's supply chain and data than the customer does themselves.
• 13:11
  SPEAKER_03: And I think that's an interesting evolution in this space as well, because uh that Izzy, we talked about power.
• 13:21
  SPEAKER_03: Yeah, that puts some power in the hands of the supplier, which really indicates that customers have got to get a grip of this data.
• 13:34
  SPEAKER_03: Um, they they need they need to understand their own data before somebody else comes in to tell them what's happening in in their environment.
• 13:43
  SPEAKER_02: Absolutely.
• 13:44
  SPEAKER_02: Something I found really fascinating in the article was the point that the savings are highly visible because they land in the PL.
• 13:53
  SPEAKER_02: While the consequence may sit somewhere completely different, why are our management systems so much better at capturing the benefit than the liability?
• 14:02
  SPEAKER_02: So um, Emmet, if I can ask, is this fundamentally a data problem?
• 14:07
  SPEAKER_02: Um, a governance problem, or a problem with how organizations think about commercial performance?
• 14:16
  SPEAKER_00: So, in my opinion, again, making decisions in isolation is the is a core problem.
• 14:23
  SPEAKER_00: So if you start making decisions by looking at doing, you know, like having a holistic picture is extremely important.
• 14:33
  SPEAKER_00: And the importance of that today is more urgent than what it was before.
• 14:41
  SPEAKER_00: So now, the you know, like as I was talking about in the uh keynote, the margins are falling big time.
• 14:49
  SPEAKER_00: And the supply chain is in disruption, you know, like major disruption in the supply chain on a daily basis, you know, like uh and the uh geopolitical issues.
• 14:59
  SPEAKER_00: So all these combined together, if you're not ready to do the worst case analysis on a regular basis, that I'm talking about weekly basis and making the decisions in context.
• 15:13
  SPEAKER_00: Okay, it's not about one supplier, it's not about two suppliers, it's looking at all the suppliers together, all the customers together, and plugging that information together and then make a holistic, again, back to my original point, contextual decision, that makes a big impact.
• 15:31
  SPEAKER_00: So the time is now, not later.
• 15:34
  SPEAKER_00: If if you delay it, then again, you're leaving, you know, like the companies, uh, the CFOs who are smart will thrive and survive.
• 15:44
  SPEAKER_00: The CFOs who are not, so we'll get hit.
• 15:48
  SPEAKER_00: So that's that's my take.
• 15:49
  SPEAKER_03: Yeah, and I think it's I think it's all of the above.
• 15:52
  SPEAKER_03: Um yeah, let let's go back to some specific data points.
• 15:58
  SPEAKER_03: Nine percent of value leakage between the time a contract is signed and ultimately the the delivery and and outcome.
• 16:08
  SPEAKER_03: Um, we're hemorrhaging value, we're hemorrhaging that anticipated value from entering into the agreement in the first place.
• 16:20
  SPEAKER_03: All of that is invisible.
• 16:22
  SPEAKER_03: You you talk about commercial intelligence.
• 16:27
  SPEAKER_03: I mean, that is that is what this is all about.
• 16:31
  SPEAKER_03: Contracting is the least reformed business process in any organization.
• 16:37
  SPEAKER_03: It is a business process, not a legal process, not a finance process.
• 16:41
  SPEAKER_03: It's a it's an organizational-wide focus um process that needs to be focused on by the entire organization, the multiple uh disciplines, functions that are involved in contracting.
• 16:56
  SPEAKER_03: Data sits fragmented around the organization.
• 17:00
  SPEAKER_03: On average, organizations have contract-related data sitting in 24 different systems.
• 17:05
  SPEAKER_03: Adding a 25th system is not helpful to any organization.
• 17:11
  SPEAKER_03: What we need to focus on is, yes, that governance layer.
• 17:15
  SPEAKER_03: It's how do we connect all of this fragmented data so that we're delivering commercial intelligence to our organizations.
• 17:24
  SPEAKER_03: Contracts have all and and the process have always been this hive of business intelligence that's been untapped.
• 17:34
  SPEAKER_01: Yes.
• 17:35
  SPEAKER_03: And traditional technologies supporting contracts have ultimately not untapped that data.
• 17:43
  SPEAKER_03: What they've done is create really good workflows for organizations and a digital repository instead of a physical repository.
• 17:55
  SPEAKER_03: Now we really have to shift the conversation.
• 17:58
  SPEAKER_03: We have to bring that diverse group of stakeholders together to address how we deliver commercial intelligence to our organization.
• 18:12
  SPEAKER_02: Yeah.
• 18:13
  SPEAKER_02: Siley, the article also suggests that we need to rethink the relationship with suppliers.
• 18:19
  SPEAKER_02: Um, not simply as a source of cost reduction, but as a source of resilience, innovation, and ultimately profitability.
• 18:27
  SPEAKER_02: Um what does that mean for the way senior leaders should approach supply negotiations when the business is under pressure?
• 18:36
  SPEAKER_03: Yeah.
• 18:36
  SPEAKER_03: So we have again talked for many years about the importance, first of all, of um supplier segmentation.
• 18:46
  SPEAKER_03: So not all suppliers are equal.
• 18:48
  SPEAKER_01: Yeah.
• 18:48
  SPEAKER_03: You're you're going to have some um some supply which is which is very transactional.
• 18:54
  SPEAKER_03: You've got uh multiple options, you can switch to whoever you decide you want to switch to at any point in time.
• 19:01
  SPEAKER_03: Um commoditized service product, that's fine.
• 19:06
  SPEAKER_03: So we we need to segment, we can put those suppliers in a bucket.
• 19:11
  SPEAKER_03: Equally, we're gonna have suppliers who are really important to the health, stability, resiliency of our business.
• 19:23
  SPEAKER_03: And it is not okay to treat them the same way as we might treat a supplier of a commoditized product.
• 19:32
  SPEAKER_03: So, first of all, we need to apply intelligence to our supplier segmentation.
• 19:37
  SPEAKER_03: And then, yes, we need to understand those suppliers that are really integral to our business and make sure that we are leading with transparency, communication, collaboration, so that working together, we can help to increase that organizational resiliency.
• 20:02
  SPEAKER_03: Because let's face it, the world around us, we've talked to both of us have talked about this today, the world around us is changing dramatically.
• 20:09
  SPEAKER_03: I say all the time, I don't know about anybody else, but the first thing I do when I wake up in the morning is pick up my phone and have a look at my news app and see what's happened while I've been asleep, who's been doing what.
• 20:19
  SPEAKER_03: And that is our reality today, and that's impacting our trading relationships.
• 20:24
  SPEAKER_03: So building organizational resiliency is absolutely critical, and that means we have to work really effectively with our suppliers in order to realize that.
• 20:37
  SPEAKER_02: Excellent.
• 20:37
  SPEAKER_02: Hey, Manth, tell me your thoughts.
• 20:40
  SPEAKER_00: So again, putting the right protections with the supplier is extremely critical.
• 20:46
  SPEAKER_00: But at the same time, when you when you're negotiating specific protections and performance standards, you have to gauge whether the supplier will be able to meet those standards.
• 20:59
  SPEAKER_00: And to meet those standards at this price, is it the right thing to do?
• 21:04
  SPEAKER_00: So there are commercial terms, there are uh risk protection terms.
• 21:10
  SPEAKER_00: So both, you have to make sure you look at it together rather than look at looking at, okay, only the commerce side or only the risk side.
• 21:20
  SPEAKER_00: So that's the first important thing, in my opinion.
• 21:23
  SPEAKER_00: And also the supplier segmentation, Sally, you talked about is extremely critical.
• 21:27
  SPEAKER_00: Uh it's like not all suppliers are equal.
• 21:30
  SPEAKER_00: So if you're getting 20% of uh certain goods, you know, like uh raw materials from X and 15% from Y, and also is it geographically distributed if you're a geographical, uh, you know, like if you're if you're going by distribution, if you're going by uh, you know, like the specific size of the businesses that you're after, that you're uh contracting, subcontracting with.
• 21:57
  SPEAKER_00: So making sure that you Look at, you know, like you get the lay of the land.
• 22:03
  SPEAKER_00: So, you know, like the modeling tools can give you some of that information.
• 22:08
  SPEAKER_00: Again, it is, it will give you one dimension, like which is more of commerce, or maybe some parts of the commerce, right?
• 22:16
  SPEAKER_00: So the the risk side is sitting in the contracts.
• 22:20
  SPEAKER_00: And also, believe it or not, the supply, the commerce side, even though it is sitting in the contract, they don't look at it.
• 22:28
  SPEAKER_00: They look at it as, you know, like I'm going to get it out into the system, into another system, and then I'll look at it.
• 22:34
  SPEAKER_00: So rather than that, you should be looking at everything together.
• 22:39
  SPEAKER_00: So just I talked about two uh factors, but it is not just that.
• 22:43
  SPEAKER_00: The relationship does not have just the risk, just the commerce.
• 22:47
  SPEAKER_00: There are many of the factors involved.
• 22:49
  SPEAKER_00: So all that thing is written in the contract.
• 22:52
  SPEAKER_00: So get back to the basics, make sure you know the complete thing that you have you're uh signing up for.
• 23:00
  SPEAKER_02: Thank you, Hemath.
• 23:01
  SPEAKER_02: So finally, if the traditional approach is to ask, you know, how much did we save, um, what should the question become?
• 23:09
  SPEAKER_02: Uh what would you want CFOs, procurement leaders, and commercial leaders to be asking themselves before they sign off a cost reduction so they can understand um not just the margin they are protecting today, but what they may be putting at risk tomorrow?
• 23:28
  SPEAKER_03: Yeah.
• 23:29
  SPEAKER_03: Yeah.
• 23:29
  SPEAKER_03: And such an important question.
• 23:33
  SPEAKER_03: Think about the consequences of the decisions that we're making today down the road.
• 23:39
  SPEAKER_03: I think one of the things, though, that we haven't talked about in all of this is there is an opportunity to innovate, to work together, to reduce costs.
• 23:52
  SPEAKER_03: And actually we should be doing that.
• 23:55
  SPEAKER_03: But that is something we should be doing together, not me saying, hey mass, that's it.
• 24:04
  SPEAKER_03: I want a 5% reduction.
• 24:06
  SPEAKER_03: I don't care how you make it, but make it because that will send you off going, okay, well, I'm gonna take people off, I'm I'm gonna remove this module or whatever you might do in order to realize that for yourself.
• 24:20
  SPEAKER_03: But if we have a different quality of conversation that says, okay, we're all struggling here.
• 24:26
  SPEAKER_03: There's this crazy world around us that's causing life to be very expensive and changing everything on a daily basis.
• 24:34
  SPEAKER_03: Um, how do we innovate?
• 24:36
  SPEAKER_03: And if we can innovate and start saving, how do how do we share that?
• 24:44
  SPEAKER_03: What does that look like?
• 24:45
  SPEAKER_03: Now, you know, gain share, pain share, that's a whole nother podcast.
• 24:48
  SPEAKER_03: Um, we could we could talk about that for a long time.
• 24:51
  SPEAKER_03: But but the point I'm making here is that these are the questions that need to be asked.
• 24:58
  SPEAKER_03: First of all, we need to ask ourselves internally, okay, well, if if we do this, have we thought about what might happen six months, twelve months down the line?
• 25:09
  SPEAKER_03: And are we engaging in intelligent conversation that says, actually, there's probably some opportunities for us to do things differently here where we can all win.
• 25:22
  SPEAKER_00: Yeah.
• 25:23
  SPEAKER_02: Absolutely.
• 25:23
  SPEAKER_02: Hemoth, please have the final note on this.
• 25:27
  SPEAKER_00: So uh, you know, like Sally talked about the innovation, but the interesting part is that innovation, encouraging that innovation, there has to be incentives you had to put in the contract.
• 25:39
  SPEAKER_00: Again, you can get creative and at the same time you can put some bounds for that.
• 25:45
  SPEAKER_00: And also to incentivize that, let's take a simple idea, right?
• 25:49
  SPEAKER_00: You want to have a tiered rebates, you want to have the tiered, you know, like uh the incentive, tiered incentive.
• 25:57
  SPEAKER_00: If you produce this much of volume at this quality, and the quality has to be, you know, like uh measurable.
• 26:04
  SPEAKER_00: If you do that, then we'll give you extra 3%, extra 5%.
• 26:09
  SPEAKER_00: So that has to be put in concrete commerce terms.
• 26:14
  SPEAKER_00: So again, what's the instrument will you use?
• 26:17
  SPEAKER_00: So will you use just uh you know, like uh just the words, or will you use will you put that in the contract?
• 26:24
  SPEAKER_00: You put it in the contract.
• 26:26
  SPEAKER_00: So everything boils down to uh putting that in the contract and making sure and using that to learn for the next vendor, next supplier, next supplier.
• 26:38
  SPEAKER_00: So using that as the benchmark, okay, were we able to move the needle?
• 26:42
  SPEAKER_00: Again, look at the PL statement and also look at this as the with the context, and able to see that and benchmark across the contract repository and then say, okay, these things have worked, these things haven't worked.
• 26:56
  SPEAKER_00: And then apply the good stuff, take out the bad stuff.
• 26:59
  SPEAKER_00: So that's something that uh CFOs can make a big impact.
• 27:03
  SPEAKER_02: Absolutely.
• 27:04
  SPEAKER_02: Well, unfortunately, this is all the time we have for this episode of the leading edge.
• 27:09
  SPEAKER_02: Um, what today's conversation has highlighted is that not all margin is created equally.
• 27:16
  SPEAKER_02: A saving that improves the economics of the business is very different from the one that simply def the cost into the future performance.
• 27:23
  SPEAKER_02: The challenge for CFOs is that those costs can be difficult to see when commercial decisions, contract specifications, supply relationships, and customer commitments sit in different parts of the organization.
• 27:38
  SPEAKER_02: Connecting that information gives finance a much clearer view of whether margin has genuinely been earned or simply borrowed from the future.
• 27:48
  SPEAKER_02: Thank you to both Sally and Hema for today.
• 27:50
  SPEAKER_02: Thank you so very much, and thank you for listening.
• 27:53
  SPEAKER_02: If you've liked what you've heard today, stay tuned for our next episode in this four-part series of The Budget is Downstream of the Contract, where we'll continue to explore the ideas, innovations, and leadership shifts shaping the future of commerce and contracting.
• 28:09
  SPEAKER_02: Until then, keep challenging, keep adapting, and keep leading.