From 'making noise' to building bridges: how to practically align accounts payable and procurement
Blog11.07.2012 Comments (0)
Accounts payable, Compliance, Procurement, Purchase to pay
The accounts payable and procurement departments are often at loggerheads over whose responsibility it is to manage suppliers and enforce compliance with an invoice processing system. But by aligning the objectives and strategies of each department, these responsibilities can be collectively and elegantly achieved.
At sharedserviceslink.com’s recent Toning Up Purchase to Pay to Attain Touchless Processing event, a roundtable session asked delegates to consider the practical ways in which finance could support the supplier management and compliance enforcing functions often left to the Accounts Payable department.
Common obstacles include differing culture, unaligned objectives, and a lack of understanding of each other’s roles:
Culturally, procurement and accounts payable are perceived to be at different ends of the spectrum. Procurement are seen as doing the sexy stuff like chasing deals and negotiating contracts and accounts payable is seen as sweeping up the ‘boring admin’.
The objectives of each department are therefore bound to be different. This is reflected in the different KPIs used. Procurement will measure financial savings while Accounts Payable will measure invoice exception rates, for example.
Living in such different worlds inevitably leads to a lack of understanding of each other’s roles. One delegate at the conference mooted that when the accounts payable department raise issues concerning compliance, unless they also present practical solutions, procurement simply hear this as ‘noise’.
So how can the departments work together to achieve mutually beneficial goals? Here are some key practical actions that the delegates came up with:
Educate the functions and senior management on the business, procurement, and finance benefits that come from aligning procurement and accounts payable
Get the functions and senior management to buy-in to the concept of realising these possibilities
Tie in a plan that helps to make these possibilities attainable
Agree on actions that need to be performed in collaboration and those that can be managed independently (ie cleaning up master data is an ideal task done collaboratively)
Arrange your KPIs to support your joint goals
Agree on the reporting of all the above so the required actions actually happen, according to the required time
Agree an escalation route should deadlines be missed