AP and Procurement Departments Combining to Utilize Procure-to-Pay
In recent years, CFO’s have been noticing a powerful shift in AP processes and how important the shift is impacting their organization. Numerous objectives, from complete AP automation to dynamic discounting, seems to be constantly expanding and work. And, for most of them, their continuing success lands squarely on one issue. Collaboration.
Key to Success
Accounts Payable Departments are finding that a proper amount of collaboration between their team and other teams in the organization is a must. It means a better chance to improve, grow, and excel the AP department. Sure, working with treasury for better cash management and working with the stakeholders in the company are important, too. However, collaborating with procurement is the key to the ultimate success of their department. Here are just some of the many benefits that can result from it:
I. Improvements in contract compliance as well as a major reduction in out-of-control spending is the result of a link between invoices, procure-to-pay, and contracts. You will also see increased success in the areas of supplier enablement. When you leverage ‘one-time’ on-boarding process that cover both your AP and procurement requirements you see your company begin to make progress.
II. Optimization of working capital for the P2P process excels when proactive payment strategies are developed via collaboration. That’s because of the ability to pursue opportunities for dynamic discounting become clear. In addition, improvements in supplier relationships abound and the AP department can make more timely E-invoicing payments to suppliers.
III. Accuracy also increases along with better data for supporting improvements in inquiry-response-times. Better accuracy in overall spending data via payments and invoices is seen resulting in identifying sourcing opportunities.
Tactics
Creating winning results within your AP department as well as your entire organization breaks down to four key essentials:
Communication: There needs to be clear verbal and written communication among your team members.
Collaboration: Taking each persons unique perspective and skill set and coming up with ideas about implementations.
Negotiation: Talk about the best outcomes that can benefit the most in the company and your vendors
Compromise: There may not be a perfect solution and so coming to the most reasonable compromise will help the company move forward.
Competitive Advantage
Organizations are finding more and more that the effective use of their procure-to-pay operations can serve as a useful weapon for gaining the advantage over their competitors. And, it’s a fact that for any organization to start achieving sustainable benefits that are genuine, everybody involved needs to be working together for success. When it comes to the AP department, collaboration with both procurement and treasury can place them in the optimum position for providing plenty of added-value to the business as a whole while also becoming more strategically aligned in all areas.
Combining Systems and Processes
So, it’s quite clear that, without collaboration, a high level of success across the entire business risk large road blocks. When teams are able to work together the compromise can result in a great ROI. Utilizing the procure-to-pay process is the way companies are taking it to the next level.