by Angela Sarno
At PaymentWorks we love Procurement and AP equally. We have amazing champions and customers in both areas, and our platform has strategic benefits to both functions. Yet, we are constantly surprised that these two seemingly made-for-each-other departments don’t always appreciate all they do in support of each other.
So we thought we’d take a stab in this two part series at playing ‘counselor’ to this couple, and walk through just how much they could learn from each other.
In a world where procurement and all associated areas (supply chain, finance, accounts payable) are under constant scrutiny, the time of simply “cutting costs” and “negotiating supplier relationships” has come and gone. Sure, procurement is often the first step in buying and driving down company costs – but increasingly, they are an internal service provider to multiple business units to help with anything from risk reduction and mitigation to making sure suppliers get paid on time (so they deliver on time!).
Every step of the end-to-end source-to-pay process is critical, but “pay” can be one of the last areas to be considered when companies scrutinize their overall risk profiles. Accounts payable can be a material driver of efficiency and agility in this area. And procurement needs to pay attention.
AP is “the last mile” in a vendor relationship and transaction — the final finance check. AP departments perform supplier onboarding, process invoices, and protect companies against fraud by determining exactly when they can hit the send button on payment. It may not be the the most glamorous process in the bunch, but from a cost avoidance and risk perspective, vendor onboarding should qualify as a medal sport. This work is essential in helping organizations avoid nightmare situations like fraudulent payments or hold-ups that will eventually cost more.
It’s also critical to ensuring positive, productive supplier relationships.
“If you are in an AP department, it’s critical to ensure there is no fraud, or you are not paying double,” says Xavier Olivera, an analyst at Spend Matters who specializes in AP automation. “This doesn’t just get rid of annoying headaches with payments, but also positively affects processes higher up in the source-to-pay chain.”
“There is a lot of investment in AP automation and payments solutions right now, especially in North America,” Olivera says.”There are millions, even billions of dollars going into these types of solutions, which are oftentimes incredible value adders that layer on top of source-to-pay technology. The idea is to really automate the entire process not only so humans can be freed up to do more strategic work, but also to reduce human error, and therefore exceptions, duplicate payments, and fraud attempts.”
When procurement starts to understand the risk inherent in onboarding their carefully cultivated supplier relationships, they can be an active participant in championing automation at the vendor onboarding and AP functions.
This type of solution is key to finding seamless processes that consider all parties involved.
“Both processes have to be unified,” Olivera said. “They are two different worlds, but they must come together because one needs to comply with the other. It ensures you have what you need and your supplier is paid – safely.”
Next week: What AP Can Learn From Procurement (yes, it goes both ways!)
PaymentWorks has a Free Guide- click below to access “Pitfalls and Practical Advice in the Quest for a Perfect Vendor Master.”
Let us show you how we can help
We’d love to walk through your process with you and talk about security, compliance, efficiency and sleeping better at night.
200 Berkeley Street, 19th Floor
Boston, MA 02116