Purchase-to-pay solutions are widely recognized as an essential component of organizations’ finance and procurement departments. Businesses have enjoyed benefits including cost savings, increased accuracy, enhanced audit trails and 60% productivity gains with automated workflows for invoice matching and exception handling, all as a result of purchase-to-pay solutions. As such, purchase-to-pay allows a business to move quickly and achieve organizational goals, connecting Purchasing to Finance, and realize order-to-payment processing.
However, despite purchase-to-pay’s well-established place in organizations’ finance processes, its performance is very rarely monitored or measured. This is because finance and procurement teams inherently approach purchase-to-pay processes from different perspectives, making it difficult for organizations to know what to measure, leading to businesses failing have a single version of the truth. But purchase-to-pay solutions can be leveraged to bridge this gap, set joint goals and measure against them to help the entire organization achieve its aspirations. So how can this be achieved?
Bridging the gap between finance and procurement leads to 3X higher return on supply management assets
To start with it requires strategic collaboration between finance and procurement departments.
When finance and procurement professionals have a profound understanding of both sides of the business, they can set specifications that will help secure value and process efficiency for the overall benefit of the business.
Despite this, currently, only 54% of businesses say their CPOs and CFOs work together, with many saying this partnership could be much closer and more effective. According to one study, 46% of organizations have yet to see full engagement between department leaders. In fact, 33% say their CFOs only ‘partially’ help in refining procurement policies.
However, CFOs and CPOs that work closely together enjoy nearly three times higher return on supply management assets and are seven times more likely to experience a high impact through innovation. Such businesses are more likely to realize the savings, ease contract negotiations, and create opportunities to gain financial benefit for the enterprise.
How finance and procurement can work together
Transparency and visibility
At the heart of this issue is the lack of visibility many organizations have across their entire purchase-to-pay infrastructure, which hampers finance and procurement teams seeing, and understanding, what their colleagues are facing.
Furthermore, without visibility and measurement in place, it is impossible for an organization to assess the impact purchase-to-pay has on its business processes, its strengths, and where it could be utilized better. Good visibility across purchase-to-pay processes helps the finance and procurement departments to obtain a single version of the truth, set clear appropriate KPIs, and start measuring performance effectively.
The process begins by utilizing a purchase-to-pay solution that provides a single dashboard of all the processes that it is handling on both the finance and procurement side. Additionally, a purchase-to-pay solution that automatically records and reports on the organization’s purchasing habits helps finance and procurement professionals to