The Relationship Between Finance and Procurement

Strategy, Communication, and the Bottom Line

The relationship between the CFO and Procurement team cannot be underestimated in value. Many companies fail to facilitate this powerful relationship and their bottom line is inevitably affected. Each party can better fulfill their own role within the organization as they work together.

E-procurement plays a huge role in helping organizations connect internally and work towards the same vision. Following are four key ways in which organizations benefit from strong finance and procurement teams working together.

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Strategy

Building strong communication and relationships between the CFO and procurement team means that procurement can purchase according to purchasing strategies. Purchasing according to budgets and contracts means significant savings. When purchasers see their position as procedural instead of strategic, CFOs ultimately lose the chance to achieve their financial goals. The best laid plans of the finance team are worthless without open and clear communication between the CFO and procurement team or leaders.

Strategies can be quickly communicated through a purchasing platform so purchasers can easily see contracts and preferred vendors. With e-procurement, the procurement team can succeed with an easy-to-use purchasing platform that relieves the burden of procedural work so everyone can focus on strategy.


Spend Insight

Without powerful insight from spend data, the CFO does not have the right resources to succeed. The CFO cannot adequately plan and prepare budgets without spend insight and cannot get that insight without the procurement team. As the procurement team purchases through an e-procurement purchasing platform, the CFO gets real-time spend data. Because the CFO can immediately know where spending is, he or she can use that insight to continuously craft better spending strategies.

A purchasing platform with immediate feedback and easy-to-read reports is a vital resource for both procurement and CFOs.


Advocates

As with all partnerships, the power of the relationship is in the ability to raise each other up. Both the finance team and the procurement team benefit from having aligned goals. Ideally, with a CPO and CFO working side-by-side, they can report to the executive team on their aligned goals and strategies. The mutual support empowers each member of the relationship.


Foresight

The earlier the procurement team gets involved with finance, the better budgets and plans the finance team can create. Procurement adds insight into long-term goals and strategies that the CFO may not have access to. For example, procurement can help the CFO craft budgets that promote better supplier relationships for long-term savings rather than what will only save money in the short-term. Also, the procurement team is likely better informed on pricing trends and can help the CFO budget and plan spending accordingly. The insights from the procurement team are incredibly valuable when taken into account early on by the CFO.

The relationship between the CFO and the procurement team can be one of the most powerful alliances in an organization. Opening up the communication between these key players will have a powerful effect on the company’s bottom line and will improve and empower both the CFO and procurement team.

 

Learn more about how Vroozi Purchase Platform helps CFOs and procurement leaders communicate and share information freely. Sign up for a free live demo today.